"There's a new type of money spreading rapidly across the internet, propelled by the crypto boom. It's supposed to be worth a dollar, but it's not issued by any government. Called a stablecoin, it is a digital currency that is subject to very little legal oversight and its growing popularity has recently transformed it into a $300 billion market. You can use stablecoins to buy things online, make investments or send money abroad with minimal fees."
"Financial experts worry that the increasing adoption of these cryptocurrencies could pose large risks to the financial system. You can use them to easily move official money into digital currencies and back again. But they do not come with deposit insurance, like money in a savings account from a bank will have. There are no fraud protections. And there is scant regulation in place to make sure people are not using them for illegal transactions."
Stablecoins are digital currencies pegged to the dollar but issued by private entities and subject to minimal legal oversight. Their popularity has grown into an approximately $300 billion market and hundreds of different stablecoin brands exist. Stablecoins enable fast, low-cost online purchases, investment access, and cheap cross-border transfers, and they can be acquired quickly on major crypto exchanges via wire transfer or credit card. Major corporations and financial institutions have explored issuing stablecoins, and bad actors use them for illicit transfers. Stablecoins lack deposit insurance, fraud protections, and comprehensive regulation, creating potential systemic and consumer risks.
Read at www.nytimes.com
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