Fiat-backed stablecoin

It works on a clear cycle. A user or institution hands fiat to the issuer, which mints equivalent tokens; reserves are custodied by regulated banks and asset managers, ideally segregated from the operating balance sheet; and the holder can return tokens to receive fiat through the redemption mechanism. Transparency rests on periodic attestations by auditors. USDC, from Circle, holds cash in US banks and Treasury bills in an SEC-registered government money market fund, with monthly attestations. USDT, from Tether, holds mostly Treasury bills and other assets, with quarterly attestations under the ISAE 3000 standard.

It is the practical foundation of programmable money in payments thanks to its predictability. In the United States, the GENIUS Act, signed in July 2025, set 1:1 reserves, redemption at par, and monthly public disclosure of the reserve composition for payment stablecoins. In the European Union, MiCA classifies single-currency stablecoins as e-money tokens with redemption at nominal value and at least 30 percent of reserves held as deposits at a credit institution.

USDC and EURC, from Circle; USDT, from Tether; and PYUSD, from PayPal with Paxos. They are the most widespread type and the one that best fits frameworks such as MiCA and the GENIUS Act.