Stablecoins
Stablecoin FAQs for business
Straight answers to the questions businesses ask about stablecoins — how they settle, what MiCA means, where the risk sits, and which coins are used. General information, not legal advice.
Stablecoin basics
What is a stablecoin?
A stablecoin is a cryptocurrency designed to hold a steady value by tracking a reference asset, usually a fiat currency such as the US dollar. It borrows the settlement speed of crypto without the price swings, which is what makes it usable for payments rather than speculation.
How do stablecoins work?
A fiat-backed stablecoin is issued against reserves and kept near its peg by open redemption: tokens are minted when fiat is deposited and burned when redeemed, and arbitrage keeps the market price close to par. The token itself moves on a blockchain in minutes.
Do we have to hold crypto to use stablecoins for payments?
No. Through a regulated provider you pay in fiat and your counterparty receives fiat; the stablecoin is only the settlement rail in between. There is no wallet to run and no token to hold or account for on your balance sheet.
How is a stablecoin different from money in a bank?
A bank balance is a supervised, often insured claim on a regulated bank. A stablecoin is a claim on a private issuer’s reserves, with no deposit guarantee. It settles faster and reaches further, but the protections differ, which is why regulated intermediation matters.
Settlement & payments
What is stablecoin settlement?
It is the use of fiat-pegged stablecoins to settle payments — especially across borders — faster and more cheaply than correspondent banking. Value moves as a stablecoin and converts to local fiat on each end, so a business settles the same day without taking on price volatility.
How fast is it compared with a bank transfer?
On-chain settlement typically completes in hours and often the same day, against the several business days a correspondent-banking transfer can take. Exact timing depends on the corridor, the currencies and the local payout partner.
Which payments benefit most?
Cross-border payments on higher-friction routes, particularly many emerging-market corridors that banks underserve. Recurring supplier, contractor and intercompany flows gain the most, because the speed and cost advantages repeat across every payment.
What happens to the exchange rate?
The FX rate is quoted up front, before you send, so the amount that arrives is the amount you expected. This differs from correspondent banking, where intermediary deductions and spreads are often only visible after the payment has settled.
Regulation & MiCA
Are stablecoins regulated?
Increasingly, yes, though it varies by jurisdiction. The EU regulates stablecoins under MiCA, and markets such as the US and UK are developing their own regimes. Common themes are issuer backing and disclosure, and licensing of the firms that provide services. General information, not legal advice.
What is MiCA?
MiCA is the EU’s Markets in Crypto-Assets Regulation, Regulation (EU) 2023/1114. It sets harmonised rules across EU member states for certain crypto-assets and for the firms that provide services around them, including stablecoins.
Can you use USDT in Europe after MiCA?
It is not a blanket ban, but MiCA generally requires a stablecoin offered to EU/EEA users to be an authorised e-money token. Because that condition was not met for USDT, several EEA venues restricted or delisted it for EEA users. Settlement through a regulated provider is a different question from trading on a consumer exchange. This is a moving picture; general information, not legal advice.
What is the difference between a CASP and a VASP?
CASP (Crypto-Asset Service Provider) is the MiCA term, and a “MiCA licence” is CASP authorisation. VASP (Virtual Asset Service Provider) comes from the FATF global AML standards and is used in many national regimes. They are related but not interchangeable.
Do EMIs need MiCA to handle stablecoins?
Under MiCA, e-money tokens must be issued by a credit institution or an authorised electronic money institution (EMI), so EMI status is the route to issuing one. Providing crypto-asset services is separate and needs MiCA CASP authorisation. General information, not legal advice.
Risk & safety
Are stablecoins safe?
A fully-backed coin from a reputable issuer, used as a short-lived settlement rail, carries limited risk, but no stablecoin is entirely risk-free. Safety depends on reserve quality, issuer solvency, the network, and whether the providers in the chain are licensed. General information, not financial or legal advice.
What happens if a stablecoin loses its peg?
Anyone holding it at that moment can face a loss, and redemptions may be delayed if the issuer is under pressure. Many de-pegs have been temporary; some coins have failed permanently. Converting to local fiat on each end of a payment limits your exposure to the brief window value is in transit.
Is it safer to hold stablecoins or convert to local currency?
For most businesses whose aim is payment rather than taking a position, converting to local currency at each end is the lower-risk approach. The stablecoin acts only as a transfer rail for the short period value is moving, so you carry little peg or price risk on your balance sheet.
Coins & networks
Which stablecoins do businesses use?
US-dollar-pegged tokens dominate, principally USDC (issued by Circle) and USDT (issued by Tether). Which is used for a given payment depends on the corridor, the network and account eligibility.
What is the difference between USDC and USDT?
Both are US-dollar-pegged and aim to hold a 1:1 peg. USDC is known for regular public reserve attestations and wide use in regulated flows; USDT is known for very broad circulation and deep market liquidity. This is general information, not a recommendation of one over the other.
Does the blockchain network matter?
Yes. The same coin can run on several networks, and the network affects settlement speed, fees and finality, as well as operational safety, since sending a coin over an unsupported network can put funds at risk. Supported networks vary by corridor and flow.
How do I find out what is supported for my market?
Availability depends on the corridor, the network and your eligibility after onboarding, so it is confirmed per market rather than published as a fixed list. Talk to the desk with your route and requirement and we will confirm what is available.