Stablecoin Types: Reference Comparison

Entry last verified September 2026.

The table

Type	Backed by	Verification	Failure record
Fiat-backed	Cash and short-dated government debt	Issuer attestation, supervisory reporting where regulated	Brief depegs during banking stress
Crypto-collateralised	Over-collateralised crypto in contracts	Directly on-chain	Held through multiple crashes
Algorithmic	A mechanism, not collateral	Not verifiable	Repeated total failures

The third category is included for completeness. It has failed at scale and the mechanism that caused it is inherent to the design.

What to verify for a fiat-backed token

Reserve composition, not the headline total. What the assets are and what maturity they carry.

Where the reserves are held. Concentration at a small number of banks produced the most significant depeg on record, when part of one issuer’s reserves sat at a bank that failed over a weekend.

Who attests, how often, and under what standard. A recognised firm working to a stated standard differs meaningfully from an unnamed one.

Regulatory status. Frameworks in major markets now impose reserve rules, redemption rights and disclosure. An issuer operating under one is supervised in a way an unregulated issuer is not.

Whether you can redeem. Most retail holders cannot redeem directly, which means the peg is maintained for them by arbitrage and exchange liquidity rather than by a right they hold.

What to verify for a crypto-collateralised token

Collateralisation ratio, visible on-chain continuously.

What the collateral is. A token backed largely by other stablecoins inherits their risks.

Liquidation mechanics under stress.

What a stablecoin is not

A bank deposit. No deposit insurance. In an issuer failure, holders are unsecured creditors.

Risk-free yield. Platforms paying a return are lending them out.

Necessarily censorship-resistant. Major fiat-backed issuers can freeze specific addresses and have done so.

The practical exit question

Whether a venue will convert the token to ordinary currency determines whether it is usable as an exit or only as trading collateral.

Which stablecoins have direct currency pairs is published by venues including exchanges quoting a direct fiat pair, and that availability matters more day to day than any attestation.

The regulatory direction

Toward comprehensive frameworks in every major market, with the consequence that the set of stablecoins available to a regulated user narrows toward those whose issuers have obtained authorisation.

For users that is an increase in safety and a reduction in choice, and both effects are real.