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Are you looking to choose the right stablecoin to secure your funds, limit volatility decentralized finance (DeFi) strategies ? Given the wide variety of stablecoin on the market, we've written this article to help you understand the differences between each stablecoin , their advantages, risks, and the reliability of the organizations that issue them. This guide highlights the specific characteristics of the best stablecoin in 2025, to help you choose the most reliable stablecoin for your needs.
Table of contents
What is a stablecoin ?
A stablecoin is a cryptocurrency designed to maintain a stable value, usually pegged to a fiat currency like the US dollar. Unlike traditional cryptocurrencies , which are often volatile , stablecoin users to benefit from the speed of transactions while limiting market volatility . Stablecoins thus enable investors and users stablecoin or exchange funds without experiencing the extreme price fluctuations typical of other assets .
The different types of stablecoin
- Centralized Stablecoin : backed by fiat currency reserves ( e.g. usdt , usdc , fdusd ).
- Decentralized Stablecoin : guaranteed by crypto-assets placed as collateral in smart contracts (e.g., dai ).
- Algorithmic Stablecoin : maintain their parity through algorithms that adjust supply and demand (ex: frax ).
Why use a stablecoin ? The advantages of stablecoin
- Volatility reduction : stablecoin are particularly used to protect against the volatility of the crypto market.
- Ease of transactions : They offer liquidity and are accepted on over 100 exchange platforms.
- Access to decentralized finance : Stablecoins stablecoin access DeFi services , staking or lending.
- Tax strategy : Staying in stablecoin can help avoid conversions to fiat currencies and therefore defer taxation in certain countries, particularly France.
Centralized Stablecoin: USDT, USDC, FDUSD, BUSD
USDT (Tether): the most widely used but controversial stablecoin
USDT (Tether) is the most capitalized and most used stablecoin investors and users in the crypto markets in May 2025. It represents more than 60% of the stablecoin market in 2025. This centralized stablecoin is backed by reserves , but the quality and transparency of these reserves have long been criticized.
- Issuing organization : Tether Limited (Hong Kong)
- Type of stablecoin : Stablecoin backed by reserves in fiat currency and other assets (Treasury bills, bonds, cash, etc.).
- Transparency: Tether has long been criticized for its lack of transparency, particularly due to allegations that USDT USDT not fully backed by dollar reserves as promised. These suspicions led to investigations and a 2021 settlement with the New York Attorney General, in which Tether admitted that it had not always maintained full cash coverage. Since then, the company has published quarterly attestation reports prepared by third-party firms, detailing the composition of its reserves (which now include Treasury bonds, gold, and other assets). However, Tether has yet to provide a truly comprehensive independent audit , which continues to fuel the debate about the reliability and exact liquidity of its reserves.
- Concerns : Doubts persist about the quality of the assets held. In 2021, Tether paid a $41 million fine to the CFTC for overstating the proportion of its reserves held in cash.
- Liquidity : USDT is the stablecoin with the highest liquidity
USDT remains the stablecoin , but it is not the most reliable for investors concerned about the quality of a stablecoin and transparency.
USDC (USD Coin): the benchmark for transparency
USDC (USD Coin) is projected to be the second largest stablecoin partnership with Coinbase , both regulated US companies. USDC is backed by reserves held in US banking institutions and regularly audited.
- Issuing organization : Circle and Coinbase (United States)
- Type of stablecoin : Stablecoin backed by reserves in fiat currency, cash or Treasury bonds.
- Transparency : Monthly audit reports published by Grant Thornton.
- Reluctance : USDC briefly lost its parity during the Silicon Valley Bank bankruptcy in 2023, but the situation was quickly restored.
- Liquidity : USDC benefits from strong adoption among institutional investors and regulated platforms.
USDC is considered the most stablecoin among centralized stablecoin in 2025, thanks to its transparency and the regulation of its issuers.
Circle updates its proof of reserve every month here .
FDUSD : Binance ’s stablecoin
FDUSD (First Digital USD) is a centralized stablecoin supported by the Binance platform . It is backed by reserves held in Asian banks. FDUSD is rapidly gaining adoption, particularly on Binance , but remains less widely used than usdt or usdc .
- Issuing organization : First Digital Trust (Hong Kong)
- Type of stablecoin : Stablecoin backed by bank reserves.
- Transparency : Monthly audit reports are available, but regulation remains less strict than in the United States.
- Liquidity : High on the Binance , limited elsewhere.
FDUSD is a relevant choice for Binanceusers, but it remains to be seen whether it can be reliable in the long term.
BUSD: The end of a major stablecoin
BUSD , formerly issued by Binance USDC production halted in 2024 following regulatory pressure from the US. Users are encouraged to migrate to other stablecoin such as FDUSD or FDUSD .
Decentralized Stablecoin: DAI, FRAX and alternatives
DAI: the leading decentralized stablecoin
DAI is the best-known decentralized stablecoin backed by crypto assets (primarily ETH and USDC ) deposited as collateral in smart contract via MakerDAO. DAI is not issued by a central entity, which limits the risk of censorship or fund freezing.
- Issuing organization : MakerDAO, a decentralized autonomous organization ( DAO )
- Type of stablecoin : Stablecoin collateralized by other digital assets.
- Transparency : All reserves can be viewed in real time on the blockchain.
- Reservations : DAI is exposed to the volatility of assets and depends in part on usdc for its stability.
- Liquidity : High on DeFi platforms, more limited on CEX.
DAI is the decentralized stablecoin decentralized finance enthusiasts , but it remains sensitive to crypto market volatility.
FRAX: a hybrid algorithmic stablecoin
FRAX is a stablecoin , combining partial collateralization with assets and an algorithmic mechanism. Its objective is to maintain parity with the dollar while limiting dependence on fiat currencies .
- Issuing organization : Frax Finance (decentralized DAO)
- Type of stablecoin : Algorithmically decentralized and partially collateralized Stablecoin
- Transparency : The reserves and the functioning of the algorithm are public.
- Reservations : Algorithmic stablecoin are fragile during periods of high volatility, as demonstrated by the collapse of TerraUSD (UST) in 2022.
- Liquidity : Good on DeFi platforms, lower on CEX.
FRAX is innovating in the decentralized stablecoin , but the risk of depeg remains, especially during market crises.
Other algorithmically decentralized stablecoin
Following the failure of TerraUSD, confidence in algorithmic decentralized stablecoin was severely shaken. These stablecoin can suddenly lose their parity if their algorithm fails to balance supply and demand during market shocks.
AdditionalUSDC Compatibilities
One of the major advantages ofUSDC in 2025 is its direct compatibility with decentralized trading platforms. These platforms, such as dYdX and Drift, allow access to derivatives (futures, perpetuals) or spot trading without going through a centralized intermediary, which notably allows users to circumvent the ban on crypto futures in France.
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On dYdX, which now operates on its own blockchain (built with Cosmos),USDC is used as the sole collateral: it is used to open, close and settle all positions, with more than 200 pairs available, maximum fees of 0.05% on the smallest volume, and liquidity recognized as one of the best in the industry.
Drift , on Solana , also offers trading in perpetual contracts, lending/borrowing and high-yield vaults, still in USDC , with fees ranging from 0.01% to 0.1% depending on volume and more than 50 active pairs.
UsingUSDC on these platforms offers several advantages: regulatory compliance, fast transactions, collateral stability, and access to global decentralized finance without geographical restrictions. Users can trade, lend, or borrow independently, earn returns on their stablecoin, and maintain exposure to a stable asset while avoiding the volatility of other cryptocurrencies. This positioning makesUSDC the benchmark stablecoin for DeFi and decentralized trading in 2025.
How do stablecoinmaintain their stability?
The key role of arbitration and trust in reserves
The stability of stablecoinpegged to a fiat currency like the dollar relies on an invisible but vital mechanism: arbitrage. This process, carried out by specialized actors, consists of profiting from price differences between various platforms to maintain the parity at $1. In concrete terms, if the price of a stablecoin issued by Tether or Circle falls to $0.98 on an exchange, arbitrageurs buy these tokens at a low price, then exchange them directly with the issuer for $1, pocketing the difference ($0.02 per unit) and thus driving the price back up.
This system only works if arbitrageurs have confidence in the issuing organization's reserves. For example, institutional investors and market makers like Jump Trading or Alameda Research will only participate in this arbitrage if they are certain that Tether Limited (for USDT) or Circle (for USDC) will honor their buyback commitments at a 1:1 ratio. If this confidence erodes—as it did during theUSDC crisis in March 2023 linked to Silicon Valley Bank—arbitrageurs abandon the market, and the stablecoin can lose its parity.
The largest stablecoin, such as USDT and USDC rely primarily on three types of actors for arbitrage:
Professional market makers (Citadel Securities, Wintermute) who have direct partnerships with issuers to create/buy back stablecoinin large volumes.
Centralized exchanges (Binance, Coinbase) that automatically adjust their prices based on buyback flows.
Specialized crypto funds (Amber Group, Genesis Trading) that exploit inefficiencies between spot transactions and derivatives markets.
This mechanism explains why the most capitalized stablecoingenerally remain close to $1 despite cryptocurrency volatility. But it also reveals their vulnerability: if reserve assets are deemed risky (such as the commercial loans held by Tether), even the most aggressive arbitrageurs can cease trading, leading to a sustained drop – as seen with Terra's UST in 2022.
Which one to choose in this context? stablecoinwith 100% liquid reserves (USDC) and regulated issuers are more resistant to crises of confidence than those based on opaque or illiquid assets.
Stablecoincollateralized by digital assets (decentralizedstablecoin)
stablecoin like DAI are backed by assets (for example, each DAI is backed by $1.50 worth of ETH or USDC USDC . This model reduces the risk of default but exposes investors to the volatility of crypto assets .
- The system is transparent and automated via smart contract.
- In the event of a sudden fall in the price of the collateral, the stablecoin can be under-collateralized and lose its value.
algorithmic Stablecoin
An algorithmic stablecoin adjusts its supply based on demand using computer code. This model aims to be completely decentralized and independent of fiat currencies , but it is riskier. The UST debacle in 2022 demonstrated that these stablecoin can collapse rapidly in the event of a crisis of confidence.
What are the disadvantages of stablecoin?
- Risk of depeg if the reserves or the algorithm are no longer sufficient to guarantee parity.
- Regulatory risk, particularly for centralized stablecoin subject to the legislation of the countries where they are issued.
- Risk of censorship or freezing of funds for centralized stablecoin .
- Exposure to the volatility of other assets for decentralized stablecoin .
Which stablecoin should I choose in 2025?
Which is the best stablecoin ? The answer depends on your priorities:
- USDC : probably the most reliable stablecoin for investors seeking transparency on reserves and strong ongoing adoption.
- USDT : the stablecoin with the highest liquidity
- DAI : the decentralized stablecoin for those who want to avoid the risks of censorship and fund freezing.
- FDUSD Binance platform users , but still in the adoption phase.
- FRAX : for innovation enthusiasts, but beware of the algorithmic risk, becoming less and less available following MiCa .
The best stablecoin are therefore those that match your investor profile, your risk appetite and your needs for liquidity or decentralized finance .
How to store your stablecoinsafely?
To store your stablecoinsecurely, it is recommended to use a physical wallet (cold wallet) such as Ledger or Trezor.
Ledger stands out for its high level of security across all models, thanks to a secure chip similar to those used in bank cards, and its Ledger Live application, which allows for easy management of over 15,000 cryptocurrencies, staking, managing NFTs, and connecting to decentralized applications. Ledger is therefore ideal for users seeking advanced management and compatibility with a wide range of tokens, including stablecoin: Ledger Live supportsUSDT,USDC, DAI, FDUSD, TUSD, FRAX, as well as most ERC-20 and BEP-20 stablecoin.
Trezor, on the other hand, emphasizes transparency with open-source firmware and a very user-friendly interface. Its devices offer advanced security features such as Shamir backup and support over 8,000 cryptocurrencies, including most major stablecoin: USDT, USDC, DAI, TUSD, and FDUSD. Trezor is often preferred by those seeking a more transparent approach.
For more details, we invite you to read our articles to find out which Ledger to choose according to your needs or compare the Ledger and Trezor .
Stablecoinand the future: CBDCs, regulation and trends 2025
stablecoin regulation is progressing rapidly. Central banks are working on their own central bank digital currencies (CBDCs), which could compete with stablecoins for stablecoin use. stablecoin are therefore expected to evolve, both technologically and regulatoryly, to remain assets users ' needs .
Impact of MiCa legislation on stablecoinin France and Europe
MiCa legislation , implemented in 2024-2025, has profoundly changed the stablecoin in France and Europe. From now on, any stablecoin pegged to a currency must be backed by real , liquid, regularly audited reserves and be issued by an authorized institution. Issuers must publish transparency reports and obtain an electronic money license. Algorithmic stablecoin are therefore automatically excluded, as they do not meet these criteria. The price of the stablecoin must remain aligned with the reference currency, strengthening confidence in cryptocurrencies .
Tether ( USDT ) was banned by MiCa because the company refused to comply with its requirements: it did not want to place its reserves in European banks or accept the imposed audits. Tether's CEO criticized these rules, deeming them incompatible with their business model. Faced with this refusal, major exchanges had to delist USDT to remain compliant.
Tether's exclusion disrupts the ecosystem: it reduces access to the largest stablecoin for European users, forces platforms to prioritize regulated stablecoin , and redistributes the market to the benefit of Circle ( USDC ) or new stablecoin in France . Users, institutional investors, and individuals must therefore adapt to a more limited offering and assets subject to strict controls.
Stablecoins backed asset baskets or other cryptocurrencies are also affected: they must publish detailed white papers and guarantee transparency regarding the nature of their stablecoin reserves . Platforms must remove any non-compliant stablecoin , limiting the choice to the most transparent and regulated stablecoin
In summary, MiCa has strengthened security and transparency around stablecoin in France , but has restricted access to the most stablecoin globally. Which one to choose stablecoin depends on compliance with this regulation, the quality of the reserves, the transparency of the issuer, and the type of collateralized or backed stablecoin selected. Stablecoins can be chosen based on their compliance, liquidity, and the robustness of their model: for example, a stablecoin stablecoin through Circle offers more guarantees since it MiCa criteria According to MiCa stablecoin must stablecoin transparent, regulated, and guarantee the security of tokens and funds for European users.
FAQ: stablecoinin 2025
What is a stablecoin ?
A stablecoin is a cryptocurrency whose value is pegged to that of a stable asset fiat currency stablecoin the dollar. Stablecoins are designed to reduce the volatility of cryptocurrencies .
What are the advantages of stablecoin?
The advantages of stablecoin are stability, speed of transactions , liquidity and the possibility of remaining in the crypto ecosystem without going back to fiat currency .
What are the disadvantages of stablecoin?
The disadvantages of stablecoin are the risk of depeg, dependence on the quality of reserves or algorithms, and regulatory risks.
Which stablecoin should I choose for decentralized finance?
DAI and FRAX are the most used decentralized stablecoin decentralized finance , but usdc and usdt remain the current leaders for their liquidity .
What is the best stablecoin in 2025?
USDC is considered the most reliable stablecoin for the majority of investors in 2025, but the best stablecoin depends on your specific needs.
Conclusion: How to choose a stablecoin ?
Choosing the stablecoin , and trust in the stablecoin issuers . USDC offers the best transparency, USDT the highest liquidity , and stablecoin and FRAX the most decentralized . Before buying stablecoin , analyze the reserves , regulation, liquidity , and reputation of each stablecoin . Stablecoins play a key role in managing your assets .
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Yoann
Training engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future ahead of it, I participate in its democratization by developing Crypternon.
