Stablecoins: How They Work, Risks, and What to Watch in 2025

When dealing with stablecoins, digital assets built to keep a steady price by pegging to a fiat currency, commodity, or algorithmic rule. Also known as pegcoins, they aim to combine crypto's speed with traditional money's reliability.

One major driver behind stablecoin innovation is the Regulatory Sandbox, a controlled environment where fintech firms test new financial products with relaxed rules. Sandboxes let issuers experiment with collateral models, from fully backed fiat reserves to over‑collateralized crypto pools, without facing the full weight of regulation right away. This flexibility fuels the rise of both stablecoins and their algorithmic cousins, which use smart contracts to adjust supply instead of holding physical assets. At the same time, Crypto Exchanges, platforms where users trade digital assets have become the primary gateways for buying, selling, and earning yield on stablecoins, making exchange policies and listing criteria crucial for liquidity and user trust.

Key Concepts Around Stablecoins

Understanding stablecoins also means looking at Tokenomics, the economic design that defines supply, demand, and incentive structures of a token. Tokenomics dictate how a stablecoin maintains its peg—whether through reserve audits, algorithmic supply adjustments, or fee mechanisms that discourage price drift. Another layer is KYC/AML, know‑your‑customer and anti‑money‑laundering procedures required by regulators, which increasingly shape how stablecoins are onboarded on exchanges and used in DeFi lending. Together, these elements create a web where regulatory sandboxes enable new designs, tokenomics ensure price stability, and exchanges provide market access—all while KYC/AML safeguards keep the ecosystem compliant.

Below you’ll find a curated list of articles that dig deeper into each of these topics—regulatory sandbox guides, exchange reviews, tokenomics breakdowns, and compliance checklists—so you can see how stablecoins fit into the broader crypto landscape and make informed decisions.