Dossiers
Stablecoins dossier
Stablecoins are tokens tracking a currency such as the euro or the dollar one for one. They now form the backbone of crypto trading: most exchange volume passes through a stablecoin. That is precisely why supervisors watch them closely. This dossier tracks the rules, the reserve structures and the risks hiding behind the promise of stability.
Timeline
- MiCA stablecoin rules become applicable across the EU.
- First non-compliant stablecoins delisted by EU platforms.
- Euro stablecoins gain market share inside the EU.
- Supervisors tighten requirements on reserve reporting.
Types of stablecoin
The main category is the fiat-backed stablecoin: for every token issued, a euro or dollar sits in a bank account or in short-term government paper. There are also crypto-backed variants using over-collateralisation, and algorithmic designs attempting to enforce stability through market mechanisms.
That last category has the worst record; the collapse of a major algorithmic stablecoin in 2022 wiped out tens of billions within days. Under MiCA, a purely algorithmic design is effectively no longer offerable in the EU.
- Fiat-backed: reserves in cash and short-term government paper
- Crypto-backed: over-collateralised, transparent on-chain
- Algorithmic: no hard backing, historically the largest risk
What MiCA requires of issuers
MiCA splits stablecoins into e-money tokens tracking a single currency and asset-referenced tokens tracking a basket. Issuers need a licence, must hold reserves segregated and liquid, and must grant holders the right to redeem at par at any time without unreasonable fees.
Reporting and transparency obligations apply, and the EBA directly supervises the largest issuers. Tokens whose issuers do not meet these requirements have been delisted by licensed EU platforms.
Where the risks sit
The core risk is issuer risk: you trust that the reserve exists, is valued correctly and can be liquidated quickly. A second is depeg, where the price temporarily drifts from one euro or dollar, usually driven by doubts about the reserve or market panic.
Then there is network risk: the same stablecoin often exists on several blockchains, and a flaw in a bridge between them can render tokens worthless on one chain while the reserve remains intact. Always check which network you receive a stablecoin on.
- Issuer risk: does the reserve exist and add up?
- Depeg risk under market stress or doubt over backing
- Network and bridge risk across multiple chains
Euro versus dollar
The vast majority of the stablecoin market is denominated in dollars. For European users that introduces hidden currency risk: converting euros into a dollar stablecoin adds dollar exposure on top of crypto exposure.
Euro stablecoins such as EURC solve that, but carry less depth and fewer trading pairs. At Block #9, euro stablecoins are therefore treated as a core market so users can stay in their own currency without landing in thin books.
Frequently asked questions
Are stablecoins the same as money in a bank?
No. There is no deposit guarantee, and the holder has a claim on an issuer rather than on a supervised bank covered by a compensation scheme.
Why did my stablecoin disappear from a European provider?
Licensed providers may only offer MiCA-compliant stablecoins. Tokens whose issuer lacks authorisation have been delisted.
Can a stablecoin lose its peg?
Yes. It has happened repeatedly, from brief deviations under stress to full collapse in algorithmic models without hard backing.
Do stablecoins pay interest?
The token itself does not. Yield comes from lending or third-party products, which brings counterparty risk unrelated to the coin's stability.