The popularity of digital assets is on the rise with recent regulation changes by the U.S. government to make the United States the “Crypto Capital of the World”.
In July 2025, the GENIUS Act was brought into law which provides a regulatory framework for stablecoins.
But the question persists as to what exactly stablecoins are and what entrepreneurs can do with them.
In this article, we look at just that.
Here goes…
What Is a Stablecoin?
Essentially, a stablecoin is a type of digital asset or cryptocurrency whose value is linked to a stable asset, for instance, the U.S dollar or gold.
The aim of a stablecoin is to provide stability in the value of the token so transactions can be carried out digitally without fear of the coin losing or gaining value due to volatility.
Traditional cryptocurrencies like Bitcoin, Ethereum and Cardano, for example, can fluctuate in value considerably over time. Therefore, if a user wanted to transact or lock in value, a stablecoin is useful as it should remain stable over time, regardless of market conditions.
In essence, stablecoins aim to combine the stability of fiat money with the efficiency and innovation of blockchain technology.
If you are new to crypto, read our article about Bitcoin, Ethereum and Cardano below:
How Do Stablecoins Work?
Stablecoins can use a variety of methods to ‘peg’ or link their value to a stable asset.
1. Fiat-Collateralised Stablecoins
Fiat collateralised stablecoins are backed by real-world currencies.
For example, for every stablecoin asset, there would also be 1 U.S dollar or equivalent held in reserve or trust to back the digital asset.
The Genius Act, for example, requires that all stablecoin issuers follow this method with 100% or one-to-one backed with liquid assets of U.S dollars or treasuries.
These stablecoins are relatively easy to understand and are usually considered the most secure as long as the held reserves backing the stablecoin are transparent and regularly audited.
2. Crypto-Collateralised Stablecoins
Crypto-collateralised stablecoins are backed by other cryptocurrencies but are over-collateralised to allow for volatility.
For example, a stablecoin issuer using this method may mint $100 of the stablecoin backed by $150 of the cryptocurrency of choice to help protect against market fluctuations.
These stablecoins are more decentralised but carry the risk that if the underlying assets fall in value too quickly, the stablecoin could ‘de-peg’ from its required value.
3. Algorithmic Stablecoins
Algorithmic stablecoins use blockchain-based algorithms or smart contracts to control the supply and demand of the coin to help maintain a fixed price.
For example, if the price of the stablecoin rises above $1, the smart contract will mint more tokens, and the value will fall back. If the price of the token falls below a dollar, the contract will ‘burn’ or delete tokens from the supply, ensuring the price will rise up to the desired value.
Although algorithmic stablecoins do work they are often the least stable option, as indicated by the stablecoin TerraUSD( USD collapse in 2022.
Benefits for Entrepreneurs
Global Accessibility
Stablecoins operate without geographical borders therefore, anyone with an internet connection and a digital wallet can transact without banking infrastructure or middlemen.
This is particularly useful in countries where inflation is high or where there is limited financial infrastructure.
Stablecoins allow entrepreneurs to transact with more potential customers globally.
Price Stability
Price stability is essential when transacting or moving funds. Entrepreneurs can use stablecoins to transact or store value without fear of market volatility eating into their gains.
Fast, Low-Cost Transfers
Stablecoins run on blockchain infrastructure therefore, transactions can be completed in seconds at a fraction of the price of traditional money transfer services.
For entrepreneurs who deal with overseas clients, this could save a fortune in foreign transfer fees.
E-commerce and Payments
Entrepreneurs’ businesses can accept payments in stablecoins and avoid credit card fees or delayed bank clearance.
DeFi Applications
Stablecoins are often used within Decentralised Finance (DeFi) ecosystems. DeFi allows users to capitalise on their crypto assets by lending, borrowing or gaining yield via methods like staking.
Stablecoins can be useful to store value from such transactions without fear of market volatility eroding any gains.
To find out more about staking, read this article:
Some Stablecoins
Here are a few stablecoins fully backed by the U.S. dollar:
- Tether (USDT)
The largest stablecoin by market cap, with approximately $159B issued. It’s mostly backed by short‑term U.S. Treasuries and cash equivalents.
- USD Coin (USDC)
Issued by Circle (now publicly listed), second in market share (~$60–64B circulation). Fully backed by cash, U.S. Treasury & money market instruments, and regularly attested.
- USDM (by Moneta Digital LLC)
Cardano’s first true fiat-backed USD stablecoin. Regulated via a U.S. Money Services Business license, with reserves held in bank deposits/money‑market funds via institutional managers like Fidelity and Western Asset Management. Launched March 2024; growing in usage.
- USDA (by Anzens/Emurgo)
Launched in March 2025 as a fully USD‑backed token on Cardano. Regulatory compliant with direct 1:1 backing. Available on decentralised exchanges like Minswap, though still establishing deeper liquidity.
The Future of Stablecoins
Stablecoins are likely to play a vital role in worldwide transactions for entrepreneurs and their businesses.
With recent moves like the GENIUS Act in the United States, policymakers are working to ensure stablecoins are safe, transparent, and interoperable with the existing financial system without stifling innovation.
In time, stablecoins may become a mainstream method of payment and savings, competing directly with bank accounts, mobile wallets, and traditional remittance networks.
Final Thoughts
Stablecoins play a vital role in the future of digital finance.
Entrepreneurs who understand the technology and implement it into their business models could see reduced transaction costs, increased cross-border economic activity and increased security.
With established stablecoins already on the market, such as Tether, USDC and Cardano’s USDM, the future certainly looks bright for entrepreneurs who incorporate stablecoins into their business plans.
Good luck!
***Disclaimer: This article is not financial advice and is given for informational purposes only. Readers should conduct their own research and not invest more than they can afford to lose. Crypto is extremely volatile, and as such can drop in value considerably without notice. You should always seek legal advice to understand if the use or investment in crypto is allowed in your jurisdiction.
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***Disclaimer: This article is not financial or legal advice and is given for informational and entertainment purposes only. Readers should conduct their own research and not invest more than they can afford to lose. Crypto is extremely volatile, and as such can drop in value considerably without notice. Pop Up World has a global presence and is not specifically targeting any jurisdiction with its content. Any crypto references are not intended for UK businesses or consumers. You should always seek legal advice to understand if the use or investment in crypto is allowed in your jurisdiction.
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