An Introduction to Stablecoins: How This Popular Asset Class Works? Alex Emelian, CEO of Simple Wallet, explains

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On July 17, 2025, Donald Trump signed the GENIUS Act into law. It establishes safe and transparent rules for the use of stablecoins in the US. However, it indicates one key point: cryptocurrency is transitioning from an "asset for geeks and traders" to a widely recognized means of payment. To understand what these assets are and why we should pay attention to them, we spoke with Alex Emelian, CEO of Simple Wallet.

What are Stablecoins?

Most people have certainly heard the terms "cryptocurrency" and "bitcoin." In theory, it's all pretty straightforward: there are digital assets that are not subject to standard financial rules and operate without central banks.

So what is a stablecoin? It is an asset that combines the relative stability of fiat currency with the decentralization of cryptocurrency. It is pegged to a stable currency at a 1:1 ratio — almost always 1 stablecoin equals one monetary unit (in most cases, a dollar or euro). So if a person has 100 stablecoins in their digital wallet, it's almost the same as having $100 in their bank account.

Why are stablecoins needed? First and foremost, they serve as a bridge between fiat and crypto. For example, to buy Bitcoin, many users first buy USDT or USDC stablecoins and then exchange them for the desired crypto asset. Simple transactions and a stable exchange rate have contributed to the expansion of stablecoin functions. Now they are used to pay for goods and services and even to pay salaries. Interestingly, according to the survey, 47% of respondents use stablecoins to protect against inflation, and 43% use them for profitable currency conversion.

What is the Secret of this Asset?

How is the stability of fiat currency determined? Most people would say it is based on each country's gold and foreign exchange reserves, as well as economic indicators. But the most important factor right now is the trust of investors and international partners. The higher this trust, the more stable the country's currency.

Trust is the basis for the formation of value and stability for most cryptocurrencies. What about stablecoins? The reliability of an asset depends on its collateralization mechanism, which falls into these categories:

• Stablecoins backed by fiat. This is the simplest and most popular model. The company that issues the stablecoin (the issuer) holds a corresponding reserve amount in fiat currency. This mechanism is designed to ensure the value of the asset. The model works as long as the reserves are real, valuable, and liquid, and the issuer provides transparent reporting (remember the message about trust). The leaders among fiat-backed stablecoins are USDT and USDC, which cover 67% and 26% of the market, respectively.

• Stablecoins backed by commodities. This refers to pegging to gold, oil, or other physical assets. Investors use this asset to access these commodities through tokens and protect themselves from volatility.

• Stablecoins backed by cryptocurrency. The first question is: how can a highly volatile asset serve as collateral? To ensure backing, the asset is typically over-collateralized, meaning a greater value of cryptocurrency is locked as collateral. For example, users of the DAI asset deposit cryptocurrency into a smart contract as collateral. Based on this collateral, the system issues stablecoins. If the price of the collateral falls, part of the assets are automatically sold to avoid losses.

• Algorithmic. The most unstable and unpredictable stablecoins that have no physical backing. Simply put, as long as users believe that it works, the asset remains stable. As a rule, the process is unpredictable and offers no guarantees.

Why Use Stablecoins?

Over the past year, the number of stablecoin wallets has grown by 53% — from 19.6 million to 30 million. The total supply of the asset in May 2025 was $247 billion. For comparison, this is almost 10% of the US cash market. Some experts are making bold predictions: in the coming years, the market could grow to $4 trillion. So what is the secret behind the rapid demand for stablecoins? There are several reasons.

International Transfers — Faster and Cheaper

Stablecoin holders can make P2P transfers or bank transfers — that is, send funds directly to a bank card or their account within a certain country. For example, you can simply install the Simple Wallet app to transfer the desired amount to your account or card. The app provides information on transfer rules and limits. At the same time, transactions are much faster than traditional interbank transfers, which can take several days.

The non-custodial Simple Wallet crypto wallet is suitable for everyday use. The platform allows you to store and exchange stablecoins (USDT, USDC, EURT) on the Ethereum, TRON, BSC, and Polygon blockchains. Thanks to integration with a virtual Mastercard and Apple Pay* *(EU/EEA residency is required to open a card), users can pay for goods and services with cryptocurrency in online and traditional stores.

Key advantages of Simple Wallet:

• A user-friendly interface designed for both beginners and experienced cryptocurrency users.

• A support team that responds within 2–3 minutes on average.

• An educational section called "Discover" with free webinars, articles, and practical tasks to help you navigate the world of cryptocurrencies with confidence.

• A non-custodial wallet is a secure crypto wallet where you control the keys yourself and which can be opened in almost any country in the world.

• Community: Telegram is developing a community of 17 million people, offering the latest news, webinars, tips, and contests, providing simple and understandable benefits for people interested in investments and cryptocurrencies.

Protection Against Instability and Inflation of the National Currency

The leading countries in the use of stablecoins are Argentina, Venezuela, Brazil, and Nigeria. They are united by almost uncontrolled inflation of the national currency. That is why the population is looking for a reliable means of preserving value. And finds it in stablecoins. And most importantly, it helps protect savings from the volatility inherent in other cryptocurrencies.

Inclusive Financial Services

Stablecoins are a transparent and decentralized payment system. And modern digital wallets allow you to use assets as conveniently as money in banking applications.

Transparency

Stablecoin transactions are recorded in the blockchain. It is a kind of digital ledger. All transactions are open (the transactions themselves, not the personal data of senders and recipients). The data can be verified in real time, and it is almost impossible to change or falsify it thanks to cryptographic protection.

What's next: a Little About the Future of Stablecoins

Stablecoins are rapidly becoming a full-fledged financial infrastructure. We are talking about a long-term development strategy: technical evolution with integration with payment systems, flexible regulatory policy, and the emergence of new security models. At the same time, innovative solutions are emerging that make using stablecoins as convenient and simple as possible. Thanks to this, almost 10% of professionals worldwide already receive their salaries in stablecoins. Today, the asset can be used like traditional fiat: for transfers, purchases, saving funds, or paying for services. And the absence of excessive bureaucratic processes and low commissions, without exaggeration, make it an asset of the future. You can try Simple Wallet for free — just download the app.

This material is for informational purposes only and does not constitute investment, financial, or legal advice.