December 8, 2025
Stablecoins have become the "digital dollar" of everyday transactions in the crypto market. They are used for remittances, parking capital between trades, protecting purchasing power in countries with weak currencies, and even for settlements between large institutions. All of this aims to maintain a stable value, typically pegged to a fiat currency like the dollar or euro.
In this article, we will break down the topic in detail: what a stablecoin is, why they exist, the main types, what they are used for, how they function behind the scenes, which are the leading ones in the market today (including USDC, USDT, USD1, PYUSD, EURC, and EURCV), risks, regulations, and points of attention for those looking to use or invest.
Why does everyone talk about stablecoin?
When Bitcoin emerged, it brought along a "Greek gift" for the average user: extreme volatility. A currency that rises or falls 10% in a day is great for speculation, but terrible for processing payroll, paying suppliers, or storing working capital.
Stablecoins emerge exactly in response to this problem. The idea is simple: to leverage the infrastructure of blockchain (fast transfers, global settlement, 24/7) without suffering the same price oscillations as BTC, ETH, and the like.
Today they are already the backbone of a large part of the crypto market:
They are the most used trading pair on various exchanges.
They function as a “safe haven” in countries with high inflation.
They are starting to be used in payments, remittances, and even as collateral for institutional operations.
Furthermore, they have grown so large that central banks have begun to worry about their impact on markets like U.S. Treasuries and financial stability itself.
What is a stablecoin after all?
Direct definition: a stablecoin is a crypto asset designed to maintain a stable price relative to a reference asset, usually a currency like the dollar or euro.
In practice, when you see “1 USDT = approximately 1 dollar,” the promise is:
For each unit issued, there is something in reserve that provides backing (cash, bonds, etc.).
The issuer commits to redeem or maintain the peg through market mechanisms.
Three important points:
A stablecoin is not “government money.” It is usually issued by private companies or protocols.
It uses blockchain for recording and transferring value.
Stability is a goal, not an absolute guarantee. In many cases the “peg” has already been broken.
How stablecoins try to maintain parity
There are some mechanisms to bring the market value of the stablecoin closer to the reference asset:
Backing in fiat currency
The issuer maintains reserves in cash, short-term government bonds, and other highly liquid assets, theoretically equivalent to the number of tokens issued. USDT and USDC are the most classic examples.Backing in cryptoassets
Protocols like DAI use collateral in BTC, ETH, or other tokens. They generally require “over-collateralization”: to issue 100 in stablecoin, you lock 150 or 200 in crypto, for example, to absorb volatility. Backing in commoditiesSome are linked to gold or other physical assets, maintaining the equivalent in custodial reserves.
Algorithmic mechanism
An algorithm adjusts supply and demand (burning and issuing) to try to maintain the price while incentives work. This model lost credibility after famous collapses like that of TerraUSD.
In practice, the market today is dominated by stablecoins backed by fiat, which is the simplest model to understand and the one that pleases regulators and institutions the most.
What is the purpose of a stablecoin in real life?
Some uses that are already well established:
Reservation in “digital dollar”
People in countries with weak currencies use stablecoins pegged to the dollar to preserve purchasing power without needing to open accounts abroad or deal with banking bureaucracy.Trading and arbitrage
Traders use stablecoins as a base pair on almost all exchanges. Buying BTC, selling, “parking” in USDT or USDC, and waiting for the next opportunity has become the norm.International payments and remittances
Sending USDC or USDT to someone on the other side of the world can be faster and cheaper than using traditional banking systems. Euro stablecoins like EURC and EURCV are starting to enter this game for transactions in euros.DeFi: loans, liquidity pools, and yield
Stablecoins are the fuel for many DeFi protocols. Users lend, borrow, farm, etc. Naturally, this adds layers of risk that go far beyond simply “holding in a wallet.”Settlement between companies and institutions
Big players are beginning to use stablecoins for nearly instant settlement of obligations, mainly in dollars. The market's growth and the fact that issuers hold massive volumes of Treasuries even made the ECB raise the alarm.
Types of stablecoins in more detail
Fiat-collateralized
These are the most common. The issuer promises: for every 1 unit issued, there is 1 unit of the reference currency (or equivalent in bonds and cash) held in reserve, under the custody of banks or regulated institutions.
Advantages:
Simple model to understand.
Generally, very low volatility around the target value.
More appealing to regulators, especially when there is transparency in reserves.
Risks:
You are trusting the issuing company and the custodian.
If the reserves are poorly managed or not what they claim to be, the “peg” may break.
Crypto-collateralized
Here, other cryptos provide the backing, locked in smart contracts. Generally, they require collateral greater than the issued value to support market fluctuations.
Advantages:
Less dependence on traditional banks and centralized custodians.
In theory, greater alignment with the ideal of decentralization.
Risks:
If the market falls sharply, there may be mass liquidations.
High complexity for the average user.
Backed by commodities
Tied to the price of gold or other physical assets. They function as a “custody token” of that asset.
Algorithmic
Attempt to maintain parity through economic incentives and automatic supply adjustments. Recent history has shown that, without strong collateral, confidence collapses quickly.
Overview of the main dollar stablecoins
Here come the stars of the game. Let's go through the ones you explicitly requested: USDT, USDC, USD1, and PYUSD.
USDT (Tether)
Largest stablecoin in the world by market value, with tens of billions of dollars in circulation.
Issued by Tether, linked to the Bitfinex exchange.
Reserves today are largely short-term U.S. Treasury securities, to the point that Tether has become one of the largest global buyers of Treasuries and influences their yields.
On one hand, it is omnipresent on exchanges around the world and has absurd liquidity. On the other hand, it has faced regulatory scrutiny, fines, and periods of less transparency about reserves, which leads many people to prefer diversifying their risk.
USDC (USD Coin)
Issued by Circle in partnership with Coinbase, under a model of 100% reserves in cash and high-quality securities, with regular audits and public reports.
Widely used by companies and DeFi protocols that value transparency and integration with the traditional banking system.
USDC tends to be perceived as “more regulated” and aligned with the financial mainstream, making it a favorite among institutions, even having temporarily lost its peg during events such as the Silicon Valley Bank crisis.
USD1 (World Liberty Financial USD)
Dollar stablecoin launched by World Liberty Financial, a project linked to the Trump family, positioned as “institutional-ready.”
Reserves held by the custodian BitGo, with a significant portion in short-term Treasuries, aligned with the USDT and USDC models.
The company plans to use USD1 as a basis for tokenizing real-world assets (RWA) such as oil, gas, and others, starting in 2026.
USD1 is a good example of the new wave: the stablecoin is already connected with RWA products, aiming for institutional and sovereign use. The downside is a higher level of politicization around the issuer.
PYUSD (PayPal USD)
Dollar stablecoin from PayPal, issued by Paxos, with reserves in bank deposits and short-term Treasuries, redeemable 1:1 in dollars.
Integrated into the PayPal and Venmo ecosystem, with hundreds of millions of users, which positions it well for payments and digital commerce.
In practice, PYUSD aims to be the “retail” stablecoin, focused on payments and integration with merchants, rather than in hardcore trading use.
Euro stablecoins: EURC and EURCV in the spotlight
While the dollar dominates the global stablecoin market, the euro game has started to heat up with the MiCA regulation in the European Union.
EURC (Circle)
Stablecoin fully backed by euro, issued by Circle, the same company behind USDC.
Operates on multiple networks, such as Avalanche, Base, Ethereum, Solana, and Stellar.
It is MiCA compliant and operates on a full reserve model, with a 1:1 redemption in euros.
EURC positions itself as the euro stablecoin most aligned with European regulation, and has been driving a significant part of the growth of the euro stablecoin market after MiCA.
EURCV (EUR CoinVertible)
Issued by Société Générale–Forge, the crypto arm of Société Générale. S
Created in 2023, it was restructured in 2024 to become an “open” stablecoin, compliant with MiCA and transferable without restrictive whitelists.
Initially focused on institutional use, as a bridge between traditional markets and DeFi.
With MiCA in effect, EURC and EURCV are two of the main forces in the euro stablecoin market, which has doubled in size over the last year and already moves hundreds of millions of dollars in market value.
How to buy and store stablecoins in practice
Direct step-by-step guidance for beginners:
Choose a reliable broker
Preferably regulated in your country or with a good global reputation, security history, and consistent volume.Complete the onboarding
Registration, document submission, proof of residence, etc. This is part of KYC regulations and anti-money laundering efforts.Deposit fiat currency
In Brazil, typically via Pix or TED. In other countries, local bank transfer or card, depending on the platform.Buy the desired stablecoin
Look for the BRL/USDT, BRL/USDC pair, or equivalent. In international exchanges, you can also find USD1 and PYUSD with pairs in dollars or other stablecoins.Decide where to store
Keeping it on the exchange is simpler but concentrates custody risk with the intermediary.
Sending it to your own wallet (self-custody) increases your sovereignty, but transfers the responsibility of securely storing the keys.
Main risks of stablecoins
Despite the name “stable,” the risk does not disappear; it just changes location. The main risks are:
Collateral and Trust Risk
If the issuer does not have sufficient reserves or if the market loses confidence, the price can deviate from parity. Emblematic cases have shown that, in times of stress, even large stablecoins can trade at a temporary discount relative to 1 dollar.
Regulatory Risk
The ECB, for example, has already warned that large stablecoins could pressure the Treasury market if there is a rush for redemption.
In Europe, MiCA brought a specific framework for electronic money tokens and large-scale stablecoins.
In the US, the environment oscillates between more openness and more tightening, with bills like the Genius Act seeking to regulate issuers.
The summary is: the regulatory landscape is evolving. What is allowed today may change, bringing new requirements for capital, transparency, and issuance limits.
Custody and Technology Risk
Loss of seed phrase or private keys means losing access to the balance.
Platforms can suffer hacks, freezes, or bankruptcy, as has happened in the crypto world more than once.
Concentration Risk
The market is extremely concentrated in a few issuers. Recent reports indicate that Tether and Circle account for around 90% of the volume of stablecoins in circulation, which makes any problem with these issuers a systemic risk.
Regulation, CBDCs, and the future of stablecoins
Stablecoins also challenged the pride of central banks. Suddenly, private companies were issuing “almost money” on a global scale.
Responses to this:
MiCA in the European Union defines specific rules for stablecoin issuers, requiring additional capital, governance, and transparency, especially for significant tokens.
CBDC Projects (central bank digital currencies) like the digital euro and the Digital Real/Central Bank of Brazil seek to offer a public, regulated, and programmable version of the official currency.
In various scenarios, the trend is not “either stablecoin or CBDC,” but coexistence: stablecoins as a layer of market and innovation, CBDCs as base infrastructure. Meanwhile, private banks begin to launch their own stablecoins, like the case of qivalis in Europe or Société Générale’s initiatives with EURCV.
Conclusion: stablecoin is a tool, not a miracle
Stablecoins are a central piece of the new digital financial infrastructure. They allow traditional money to enter the blockchain with price stability, opening up space for almost instant global payments, DeFi, asset tokenization, and innovation at scale.
But that doesn't mean they are risk-free. The risk shifts from “the price fluctuates every day” to other areas: quality of the backing, governance, transforming regulations, and market concentration among a few giant issuers.
When you look at USDT, USDC, USD1, PYUSD, EURC, and EURCV, you are looking at a kind of global real-time laboratory: traditional banks, big techs, crypto giants, and even politicians competing over who will be the layer of trust for digital money.
If the idea is to use stablecoins responsibly, think of them as high-impact tools, not as “magical dollar savings.” Study the issuer, understand the reserve model, follow regulations, and, most importantly, do not invest in any digital asset an amount you wouldn’t be willing to see locked up in case of issues.
The money remains yours, but the architecture that moves it is changing rapidly. Stablecoins are precisely the most visible interface of this transition between the old financial system and the new world of digital assets.
