What Are Stablecoins? USDC, EURC, USDT and MiCA Explained

Short answer: a stablecoin is a crypto token designed to keep a steady price, usually 1 US dollar or 1 euro. The biggest ones, such as USDC, USDT and EURC, are backed by cash and short term government bonds held by the issuing company. They let you move money on a blockchain in minutes, any day of the week, without the price swings of bitcoin. In the EU, MiCA now sets strict rules for who may issue them.

Why stablecoins exist

Bitcoin and ether can move 5% or more in a single day. That is a problem if you just want to pay someone, park money between trades or send funds abroad. Stablecoins solve this by tracking a familiar currency while keeping the advantages of crypto: fast transfers, 24/7 availability and compatibility with exchanges and wallets.

Today stablecoins are some of the most used tokens in crypto. Most trading on exchanges is priced against them (for example BTC/USDT or ETH/USDC), and they are used for cross border payments, savings in dollars in countries with high inflation, and as the base currency of many DeFi apps.

How a stablecoin keeps its value

The common model is simple. A company receives 1 dollar and creates (mints) 1 token. When someone returns the token, the company pays back 1 dollar and destroys (burns) the token. As long as people trust that each token can be redeemed for 1 dollar, traders keep the market price close to 1: if it drops to 0.99, buyers step in to redeem at 1.00, and if it rises to 1.01, issuers mint more.

The quality of a stablecoin therefore depends on its reserves (what backs the tokens), the redemption rights of holders and the regulation and audits behind the issuer.

Types of stablecoins

Fiat backed

Backed by cash, bank deposits and short term government bonds. Examples: USDC and EURC (issued by Circle), USDT (Tether), PYUSD (PayPal). This is by far the largest group.

Crypto backed

Backed by other crypto locked in smart contracts, usually worth more than the stablecoins issued (overcollateralized) to absorb price drops. DAI, now continued as USDS by Sky (formerly MakerDAO), is the best known example.

Algorithmic

Try to hold the peg with code and incentives rather than full reserves. The most famous example, TerraUSD (UST), collapsed in May 2022 and wiped out tens of billions of dollars in days. Beginners should treat this type with great caution. Under MiCA, purely algorithmic designs do not qualify for the stablecoin rules.

The big names

Status checked October 2026. Rules and listings change, so check the issuer and the ESMA register before relying on this.

Stablecoins and MiCA

MiCA, the EU Markets in Crypto Assets regulation, created the first full rulebook for stablecoins in Europe. Its stablecoin rules have applied since 30 June 2024. MiCA uses two categories:

• E-money tokens (EMTs) track a single official currency, such as USDC or EURC. Only an authorised credit institution or e-money institution may issue them.
• Asset referenced tokens (ARTs) track a basket of currencies, commodities or other assets, and need their own authorisation.

Key protections for holders of EMTs include:

• Redemption at par. You have the right to get your money back at face value at any time, without a fee except in limited cases.
• Safe reserves. Funds must be held in secure, liquid assets, with a large share in bank deposits, and kept separate from the issuer’s own money.
• No interest. Issuers and crypto service providers may not pay interest on EMTs, so be careful with “earn 10% on your euros” offers.
• White paper and supervision. Issuers publish a white paper and are supervised by a national authority, with extra rules for very large (“significant”) stablecoins.

Circle received an e-money licence from the French regulator in July 2024, which makes USDC and EURC MiCA compliant. Tether has not sought authorisation, so exchanges serving EU customers have limited USDT trading for European users. The United States passed its own federal stablecoin law, the GENIUS Act, in July 2025. More on the EU framework in our crypto regulation guide.

Risks of stablecoins

• Depegging. A stablecoin can lose its peg if people doubt the reserves. In March 2023 USDC briefly fell to about 0.88 dollars after Circle disclosed that part of its reserves sat at the failed Silicon Valley Bank. It recovered within days, but it showed that “stable” is not “risk free”.
• Issuer risk. You depend on the issuer managing reserves well and honouring redemptions.
• Freezing. Issuers of USDC, EURC and USDT can freeze tokens at specific addresses, for example on law enforcement request.
• Platform risk. Stablecoins held on an exchange are only as safe as that exchange. Check its licence and proof of reserves.
• Currency risk. If you live in the eurozone and hold USDC, your balance still moves with the euro to dollar exchange rate. EURC avoids that.
• Wrong network. USDC exists on many blockchains. Sending it on a network your wallet does not support can lose it.

How beginners use stablecoins

1. Parking money between trades without converting back to euros and paying bank fees.
2. Buying other crypto. Many markets are deeper in USDT or USDC pairs than in EUR pairs, which can mean better prices. See the cheapest way to buy USDC.
3. Sending money to another wallet or exchange in minutes, including weekends.
4. Dollar cost averaging from a stablecoin balance into BTC or ETH, see what DCA is.

To get stablecoins, use an exchange that supports the coin in your country. Compare options in our exchange comparison. In our overall ranking BingX is #1 and OKX is #2, and our free beginner guide explains how to check that a platform is allowed to serve you in the EU.

Frequently asked questions

Not financial advice. This article is for education only. Crypto prices are volatile and you can lose all the money you invest. Check the rules in your country before you buy.