Coins and Tokens 3 min, 25 sec READ

by Mike Dalton

A look at the most important stablecoins on the crypto market.

Stablecoins are dollar-pegged tokens that play an important role in crypto investing. They allow investors to “cash out” their crypto without moving it out of an exchange. In other words, investors can convert price-volatile coins like Bitcoin (BTC) and Ethereum (ETH) to a U.S. dollar equivalent without paying expensive withdrawal fees.

This option is very useful during periods of price fluctuations and market uncertainty. The following stablecoins are some of the most notable on the market.

Tether (USDT)

Tether's USDT is by far the largest stablecoin on the cryptocurrency market. As of Sept. 21, it had a market cap of $83 billion and a daily volume of $13 billion. 

USDT’s high market standing means that it has attracted very widespread support from exchanges. USDT can be traded on 115 exchanges including Binance, Coinbase Pro, Kraken, Kucoin, Crypto.com, and Binance.US. It is also listed on Bitfinex, a cryptocurrency exchange that shares a parent company with Tether.

USDT exists on several different blockchains including TRON, Ethereum, Solana, Avalanche, Tezos, Kava, EOS, Liquid, Algorand, and Polkadot. USDT's broad cross-chain support means that USDT holders can easily spend the token on each blockchain network’s numerous decentralized finance, or DeFi, apps.

Despite USDT’s high standing, the stablecoin is highly controversial. Controversies surrounding the asset are largely due to a lack of transparency around the financial reserves that underpin USDT, and due to past legal and regulatory cases.

USD Coin (USDC)

Circle's USDC is the second-largest stablecoin at present. USDC had a $25 billion market cap and reported $5 billion in daily volume on Sept. 21.

USDC is listed on 92 cryptocurrency exchanges including Binance, Kraken, KuCoin, and Bitfinex. It is also the primary stablecoin supported by Coinbase, which played an early role in the now-dissolved USDC governance consortium CENTRE. Coinbase remains highly involved with Circle and USDC despite the dissolution of CENTRE.

USDC is available on several blockchains including Algorand, Arbitrum, Avalanche, Base, Ethereum, Flow, Hedera, NEAR, Noble, OP Mainnet, Polkadot, Solana, Stellar, and TRON. Once again, this means the stablecoin can be used with numerous DeFi apps.

USDC aims to solve some of USDT's issues through better regulatory compliance and greater reserve transparency. USDC has also seen fewer high-profile controversies, though it faced criticism when it lost its $1.00 peg and fell below $0.87 during Silicon Valley Bank's collapse in March 2023. USDC quickly recovered parity with the dollar.

Binance USD (BUSD)

Binance USD is the third-largest stablecoin by volume; it traded $2.1 billion over 24 hours on Sept. 21. It is also the fifth-largest stablecoin by market cap ($2.4 billion).

As its name suggests, Binance USD is primarily offered by and used with the global crypto exchange Binance. BUSD is available on at least 35 exchanges.

Binance USD is issued on Ethereum, but pegged versions of the stablecoin are issued on numerous other networks including BNB Chain, Avalanche, and Polygon. As with USDC and USDT, this allows holders to use BUSD with multiple DeFi services.

Future support for BUSD is limited. Binance's global arm has announced that it will end support for BUSD entirely by February 2024; this is because its partner, Paxos, said it would stop issuing BUSD following regulatory actions in early 2023. 

PayPal USD (PYUSD)

PayPal recently announced its own stablecoin, PYUSD. Though the asset has a relatively small market cap of just $44 million, it has the backing of one of the largest payment companies in the world and could soon grow rapidly.

PYUSD can be circulated on PayPal and the related app Venmo. It is also available on at least four major crypto exchanges including Crypto.com, Bitstamp, Coinbase, and Kraken. Currently, PYUSD exists solely on the Ethereum blockchain, and accordingly, it can be used with compatible Ethereum services, wallets, and DeFi platforms.

PayPal can be freely traded between PayPal and Venmo —  a level of cross-wallet transfer that PayPal says is unique to its stablecoin. Though it is still a minor player, PYUSD may be the best stablecoin for those who use traditional payment apps.