Last Updated on December 19, 2021
A class of cryptocurrencies that attempt to offer price stability and are backed by a reserve asset. e.g.: USDT, TUSD.
Stablecoins have gained traction as they attempt to offer the best of both worlds—the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.
The U.S. government had a meeting over stablecoins, and released this document of their findings.
Fiat-Collateralized Stablecoins
“Fiat-collateralized stablecoins maintain a fiat currency reserve, like the U.S. dollar, as collateral to issue a suitable number of crypto coins. Other forms of collateral can include precious metals like gold or silver, as well as commodities like oil, but most of the present-day fiat-collateralized stablecoins use dollar reserves.
Such reserves are maintained by independent custodians and are regularly audited for adherence to the necessary compliance. Tether (USDTUSD) and TrueUSD (TUSDUSD) are popular crypto coins that have a value equivalent to that of a single U.S. dollar and are backed by dollar deposits.”