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A stablecoin is a digital asset built to hold a fixed value by pegging its price to another asset, most often a fiat currency like the U.S.
The rules that determine what an issuer must hold to back every stablecoin it puts into circulation are called reserve requirements. Major jurisdictions are now writing those rules.
How a price peg works Pegging means promising a fixed exchange rate. A stablecoin that promises one-to-one parity with the U.S.
dollar requires the issuer to hold enough assets to honor that promise when any holder wants to redeem. The peg does not sustain itself.
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