Digital assets
Stablecoin
A crypto token designed to hold a fixed value, usually one US dollar.
How it works
Fiat-backed stablecoins hold reserves of cash and short-term debt against the tokens issued. Algorithmic ones attempt to maintain the peg through supply rules rather than reserves.
They are the settlement layer of most crypto trading, since they allow positions to be closed without leaving the ecosystem.
Where it misleads people
A peg is a promise, not a property. Algorithmic stablecoins have collapsed to near zero, and reserve-backed ones depend entirely on the quality and auditability of the reserves.
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Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.