The kinds of stablecoin
Stablecoins differ in what stands behind the promise of a stable price:
- Fiat-backed: the issuer holds reserves in the currency and redeems each token for it
- Crypto-collateralised: other crypto-assets, worth more than the tokens issued, are locked in smart contracts
- Commodity-backed: each token represents a quantity of gold or another asset
- Algorithmic: software expands and shrinks the supply, with little or no reserve
How EU law classes a stablecoin
MiCA sorts a value-stabilised token by its reference. A token that references one official currency is an e-money token, and one that references any other value or right, or a combination, is an asset-referenced token. Each may be offered to the public in the EU only by its issuer, or with the issuer's written consent, and the issuer has to meet MiCA's conditions.
Recital 41 adds that the classification applies however the issuer designs the mechanism that keeps the value stable, so-called algorithmic stablecoins included.
Where stablecoins are used
As the quote asset of exchange trading pairs, as the payment asset at crypto checkouts, for supplier payments across borders, and to fund crypto cards. The fiat-backed kind, which includes USDT and USDC, is the one a payments product mostly meets.
Whatever the design, a stablecoin can lose its peg when holders doubt the backing or cannot redeem. The same stablecoin also exists as separate tokens on several networks, and each product chooses which issuers and networks to support.
Stablecoin, e-money token or CBDC?
- E-money token
- The EU's legal category for a stablecoin that references one official currency, with a right to redeem at par.
- CBDC
- Digital money issued by a central bank, and a claim on it. A stablecoin is issued by a private firm.
- Bitcoin or ether
- No issuer promises a value, and the price floats freely.
Where a stablecoin shows up in a platform
Modules that do the work
- Custody & walletsWallets on every major chain, with MPC custody from leading providers or your own keys.
- CheckoutA hosted checkout for cards, wallets, bank payments and crypto, routed to the best provider.
- FXCurrency conversion with live rates, your margins and the liquidity provider you choose.
- PayoutsMoney out to bank accounts, cards and wallets, on the rail that fits each payment.
Platforms that need it
Guides that go deeper
- Stablecoin payments for EU merchants: MiCA, USDC and the Travel RuleWhat a stablecoin checkout for EU merchants needs: MiCA and payment licences, why USDC and not USDT, Travel Rule checks on self-hosted wallets, euro settlement and refunds.
- Stablecoin B2B payments: how paying suppliers abroad worksHow a stablecoin payment to a supplier abroad moves, from euros in to local currency out, what changes against correspondent banking, and the rules in the EU, the UK and the UAE.
Where it is written
The laws and standards this page's facts come from.
General information, not legal advice: what applies to you depends on your services and your market.