A beginner’s guide to stablecoins

Still confused? Join any of our CoinDesk University’s School of Stablecoins sessions to talk to the people actually building the stablecoin technology for consumers and businesses.

Who actually holds the money?

With fully backed stablecoins, the issuer holds the money. However, that doesn’t mean that a stablecoin issuer has a bank account and deposits $1 at a time when a new stablecoin is minted.

Instead, fiat-backed stablecoin reserves are usually held by custodians like BlackRock or BNY Mellon. And since each stablecoin issuer decides what their collateral looks like — whether it’s cash or other highly liquid assets — the type of custodian they use will vary based on what actually makes up the reserve.

For overcollateralized stables or coins with algorithmic backing, the issuers usually hold their version of reserves in smart contracts or blockchain-based wallets.

How do I get a stablecoin?

“Even established banks, fintechs, and payment companies that move millions of dollars in transactions every day ask this,” says Better Money Company’s Broner. “And it's a fair question, because the on-ramps aren't always obvious.”

So don’t feel embarrassed if you have to ask again. In the cryptocurrency industry, there are exchanges, wallet providers, custodians, payment platforms, plus decentralized and centralized versions of all those. The answer depends on what you're trying to do with the cryptocurrency after acquiring it.

During CoinDesk University’s School of Stablecoins, you’ll hear from experts in the field about the digital storefronts you can patronize to get your hands on stables and what you can do with them afterward.

What happens if everyone redeems their stablecoins at once?

The U.S. dollar was on the gold standard until 1971 — that meant that you could walk into your bank and demand an equal amount of gold in exchange for dollars at any time. If you did that now, you’d be laughed out of the bank. But fiat-based stablecoins actually still work this way.

If you own a USD-backed stable that’s 100% collateralized, you can redeem it for dollars at any time. If every single person that owned that USD-backed stable went to the issuer to get their dollars at the exact same time (a probabilistic nightmare), hypothetically, everyone would get their money back — it just might not be instantaneous.

As the stablecoin market has grown, issuers have moved away from full cash reserves and instead are filling their reserves with Treasury notes and bonds, all of which should be highly liquid. But as the Silicon Valley Bank collapse showed, when people “run on a bank” that holds stablecoins, the dollar peg can get a little shaky.

What if the government bans stablecoins?

This isn’t as far-fetched as it might sound. In the U.S., the long-awaited CLARITY Act has been held up by unresolved issues, such as banning stablecoin yield (a rightfully tetchy issue). Businesses using stablecoins have been wary of keeping on the right side of regulation, even while getting mixed signals from Washington.

Whether CLARITY ends up passing or not, there’s still a lot to be aware of when using stablecoins in the U.S.. It's why we invited the Blockchain Association and some of its partners to break down exactly what your business needs to know about policy and compliance.

Are stablecoins safe?

You’ve read the headlines of people losing millions of dollars of cryptocurrency, whether by losing their private keys, having invested in a scam or a project that gets hacked. As we mentioned above, depending on what type of stablecoin you’re investing in, there may be more or less risks associated.

According to Broner, though, that’s rapidly changing as legislation, such as the GENIUS Act, is passed, mandating that stablecoin issuers hold safe collateral as reserves and introducing federal oversight and transparency requirements.

“For an industry trying to earn mainstream confidence, that's exactly the foundation you need,” Broner says.

Join us live at Consensus 2026 for our School of Stablecoins workshop series to learn more about how you can implement this new payment method for faster, cheaper, more programmable transactions in this new era of business.