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Par & ReserveStablecoin Risk Report

Stablecoin 101

Stablecoins, explained in plain English

A free primer for anyone new to stablecoins: what they are, how the GENIUS Act regulates them, how they compare with the payment rails and apps you already use, and how they relate to bank deposits. It takes about 10 minutes to read. Every fact is footnoted to a primary source where one exists.

Facts current as of

About 10 minutes in total

Key takeaways

  • A stablecoin is a claim on a private issuer and its reserve assets. It is not a deposit or a share account. Stablecoins are not FDIC- or NCUSIF-insured, and the GENIUS Act makes it unlawful to represent that payment stablecoins are federally insured.[1]
  • Stablecoins differ a great deal from one another. Reserve assets, redemption terms, independent reporting and the issuer's regulator all vary, and pegs have broken before (USDC briefly in March 2023, TerraUSD permanently in May 2022).[2][3]
  • The GENIUS Act became law on July 18, 2025. By its own formula it takes effect on January 18, 2027. NCUA, OCC, FDIC, Federal Reserve and Treasury rules were still at the proposal stage as of the date on this page.[1][4][5]
  • Only permitted issuers may issue payment stablecoins in the US: licensed subsidiaries of insured banks and credit unions, federal qualified issuers overseen by the OCC, and state qualified issuers.[1]
  • Issuers may not pay holders interest or yield. The issuer keeps the income on its reserves, and holders get dollar stability and speed. Stablecoins therefore compete with transaction deposits on convenience rather than on rate.[1][6]
  • The speed is real: transfers run 24/7 and settle in seconds to minutes. It comes with different risks, including irreversible transfers, smart-contract and key-management risk, network and conversion fees, and new compliance obligations.[7][1]

Read in order, or jump to a topic

  1. 01 · 3 minWhat stablecoins areTypes of stablecoins, minting and redemption, reserves and attestations, how they differ from tokenized deposits and CBDCs, and why pegs break.
  2. 02 · 3 minThe GENIUS ActWho can issue, reserve and disclosure rules, the ban on paying interest, holder priority, the effective date, agency rulemaking status, and a note for credit unions.
  3. 03 · 2 minSpeed and costSettlement time, operating hours, finality and published network fees for ACH, Same Day ACH, Fedwire, FedNow, RTP, cards, SWIFT and stablecoins, and the trade-offs.
  4. 04 · 2 minStablecoins vs. payment appsClosed-loop app ledgers versus open tokens: who holds the money, insurance versus a claim on reserves, settlement, hours, cross-border reach, programmability, freezes and fees.
  5. 05 · 2 min"A T-bill that settles in 10 seconds"Why fiat-backed stablecoins are described this way, the critical difference (holders don't earn the yield), tokenized Treasury funds as a separate category, and what it means for deposits.
  6. 06 · 1 minGlossaryPlain-English definitions of the terms used in this primer and in the Stablecoin Risk Report.

Sources

  1. [1]U.S. Congress / GPO, GENIUS Act, Public Law 119-27 (statute text) (opens in a new tab), July 18, 2025.
  2. [2]Circle, $3.3 Billion of USDC Reserve Risk Removed, Dollar De-peg Closes (opens in a new tab), March 2023.
  3. [3]SEC, Press release 2023-32: charges against Terraform Labs and Do Kwon (opens in a new tab), February 16, 2023.
  4. [4]NCUA / Federal Register, Proposed rule: Investments in and Licensing of Permitted Payment Stablecoin Issuers, 91 FR 6531 (RIN 3133-AF69) (opens in a new tab), February 12, 2026.
  5. [5]OCC, Bulletin 2026-3: GENIUS Act Regulations, Notice of Proposed Rulemaking (opens in a new tab), March 2026.
  6. [6]U.S. Treasury Borrowing Advisory Committee, Digital Money: TBAC charge, Q2 2025 (opens in a new tab), April 2025.
  7. [7]ethereum.org, Proof-of-stake (finality) (opens in a new tab).

Educational material only. Not legal, investment, tax or accounting advice, and not a recommendation about any asset, issuer or vendor. Laws and agency rules are changing; check the cited primary sources and consult counsel before acting.