A crypto token designed to stay pegged to the value of a currency such as the US dollar.
The large stablecoins hold reserves in cash and short-term Treasuries so they can redeem one-for-one. Their safety depends entirely on those reserves. Algorithmic stablecoins without real backing, such as TerraUSD, collapsed spectacularly in 2022. The US created a federal framework for payment stablecoins in 2025.