A Stablecoin Is a Promise That One Token Equals One Dollar. Now There Is a Law Behind It.
Stablecoins are crypto tokens pegged to a currency such as the US dollar. USDT and USDC hold about four-fifths of the market, and the GENIUS Act sets the first US federal rules, with one-to-one reserves and redemption rights.
By the UISC BD Editorial Desk · United Information Service Center · Published 13 September 2026 · 6-minute read
This article explains how stablecoins work. It is general information, not financial or investment advice.
Bitcoin's price can swing by thousands of dollars in a day. That is useless for paying rent. Stablecoins exist to solve that problem — and they have quietly become one of the most important parts of the crypto system.
What a Stablecoin Is
A stablecoin is a crypto token designed to hold a fixed value, usually one US dollar. The issuing company says it holds reserves — cash, short-term government debt or similar assets — so that every token can be redeemed for a dollar.
In practice, stablecoins are used to move dollar value quickly between exchanges and wallets, to park money inside the crypto system without selling back to a bank, and increasingly for payments and cross-border transfers.
The Two Giants
Two tokens dominate:
- USDT, issued by Tether — around $189 billion in Q1 2026.
- USDC, issued by Circle — around $77 billion in Q1 2026.
By mid-April 2026, USDT made up roughly 58 percent of dollar-backed stablecoin supply, and USDT and USDC together accounted for about four-fifths of the whole market.
The balance is shifting. Tether's USDT supply contracted by about $3 billion in Q1 2026 — its first quarterly decline since 2022 — while Circle's USDC added about $2 billion to reach $78 billion, driven by institutional demand for regulated assets.
The GENIUS Act
The GENIUS Act, enacted in July 2025, gives the United States its first federal rulebook for payment stablecoins. It requires:
- Permitted issuers — only approved entities may issue payment stablecoins.
- Liquid one-to-one reserves backing every token.
- Disclosures about those reserves.
- Redemption procedures, so holders can convert back to dollars.
- Financial-crime controls.
The law takes effect on the earlier of 18 months after enactment — pointing to around January 2027 — or 120 days after final regulations are issued.
Why USDT and USDC Face It Differently
USDC, from a US-based issuer, appears positioned to move into the regulated framework, subject to approvals and final rules.
USDT's position is more complex because it is issued abroad. Tether is pursuing compliance while also using a separate US-focused token.
The Risks That Remain
Reserve risk. A stablecoin is only as good as the assets behind it and the honesty of the reporting. The reserve and disclosure rules exist because this has been a real concern.
Run risk. If many holders try to redeem at once and reserves are not liquid, a token can lose its peg.
Issuer risk. A stablecoin is a claim on a private company, not a bank deposit with government insurance.
Scam risk. Fraudsters frequently ask victims to pay in USDT precisely because it is stable, fast and hard to reverse — a pattern described in our guide to pig butchering scams.
Stablecoins Versus Central Bank Digital Money
A stablecoin is a private company's digital dollar. A central bank digital currency would be issued by the central bank itself. The two are competing visions of digital money, compared in our report on CBDCs.
Related reading
- MiCA Deadline Passed: About 80% of EU Crypto Firms Did Not Get a Licence
- What Moves Exchange Rates, and Why the Fed's 16 September Decision Matters
- Is the AI Stock Boom a Bubble? The Numbers on Both Sides
- Central Bank Digital Currencies: 134 Countries Exploring, 3 Fully Launched
Sources
- "What is the GENIUS Act? US stablecoin law explained for 2026," Eco — eco.com
- "2026 stablecoin laws: GENIUS Act rules for USDT and USDC," Stablecoin Laws — stablecoinlaws.org
- "GENIUS Act stablecoin rules 2026: what USDC and USDT holders face," Phemex Academy — phemex.com
- "GENIUS Act stablecoin compliance (July 2026)," Decentralfeed — decentralfeed.com
