The word “stablecoin” may have a pleasant ring to it — isn’t it nice to have something stable in the volatile cryptoverse? — but for critics, they are nothing short of a ticking time bomb. Whether that’s true or not, the push for regulating stablecoins is gaining momentum. The United States and the European Union are getting closer to formalizing their playbooks, and given the history of financial regulation emanating from Washington and Brussels, as well as the Financial Action Task Force’s guidelines on crypto over the past few years, it’s safe to say that the rest of the world will be following suit.
That said, regulating stablecoins is no easy task, as such coins come in all shapes and sizes, which makes a one-size-fits-all solution a problem. The top three stablecoins by market cap — Tether (USDT), USDCoin (USDC) and Binance USD (BUSD) — are all pegged against the U.S. dollar. According to their respective developers, they are backed by reserves of greenbacks and other various financial instruments to keep their value at $1 at all times.