From the Document: "Stablecoins are digital assets generally designed to maintain a stable value by linking the value to a national currency or other reference assets. The term 'stablecoin' does not affirm that a particular coin actually achieves a stable value. Some consider terms such as 'private asset-linked tokens' as better descriptors considering the nature of the instruments. The top four stablecoins by value (Tether, USD Coin, Binance USD, and Dai) reached around $128 billion in market capitalization as of November 10, 2021, according to CoinMarketCap. Many stablecoins have different operational structures and reserve compositions ('Figure 1'). Reserve assets backing stablecoins could include fiat currencies, traditional financial assets, or other digital assets and algorithms. Many stablecoins at the current stage of development are primarily used for payments functions to facilitate digital asset trading and lending. Although stablecoins represent a small fraction (5%) of the digital asset industry's total value, they facilitate more than 75% of trading on all digital asset trading platforms as of October 31, 2021. Stablecoin-related policy concerns include issues related to market integrity, investor protection, financial stability, monetary policy, payments, and illicit activity prevention. [...] Stablecoins have attracted discussions regarding potential fraud and manipulation and the need for disclosure and transparency. [...] In response to the rapidly developing conditions, the Financial Stability Oversight Council (FSOC) added stablecoins to its November 2021 meeting agenda, and the President's Working Group on Financial Markets (PWG) published a report on stablecoins in November 2021."
CRS In Focus, IF11968
Congressional Research Service: https://crsreports.congress.gov/