A Complete Guide to Stablecoins

From 2018 onwards, new stablecoins have been pouring onto the markets. Although many are straightforward fiat-collateralized variants on the original stablecoin, Tether, many other projects are also innovating on the stablecoin concept. Therefore, this guide categorizes and explains the different types of stablecoins on the market today.

The Rising Popularity of Stablecoins

One reason that stablecoins have become so prevalent over the last couple of years is, quite simply, that there’s a demand for them. A Binance report published in November 2019 indicated that around 96 percent of institutions surveyed were using stablecoins, predominantly fiat-backed.

Although the report didn’t elaborate on how the stablecoins are used, it seems most likely that they represent a fast and inexpensive alternative to fiat deposits and withdrawals and a means of avoiding Bitcoin’s volatility. This is also how they became popular among retail exchange users, particularly on exchanges that don’t offer the opportunity to purchase crypto with fiat.

Currently, few stablecoins have any kind of regulated status. Those that do, such as Gemini Dollar and TrueUSD, have obtained it on a voluntary basis. However, the regulatory status of stablecoins could soon change, based on recent statements from agencies such as FinCEN that stablecoins represent a form of money transmission. If this happens, users of stablecoins may find themselves subject to know-your-customer and anti-money-laundering checks. Read More...