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Crypto goes steady: Stablecoins
As stablecoins gain traction, we tackle six key questions around what they are and their role in today’s digital economy.
October 2025
Key takeaways
- Stablecoins are a form of cryptocurrency designed to be stable in value, commonly pegged to an underlying fiat currency, and backed by highly liquid reserve assets. They function as a medium of exchange, rather than serving as an investment vehicle.
- From cross-border to retail transactions, stablecoins can be a cheaper and more efficient option when compared to other consumer payment methods. However, they also introduce challenges, such as irreversible transactions and exposure to de-pegging, which can impact scalability and stability.
- In July 2025, the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) became law ─ marking the first comprehensive U.S. framework for regulating stablecoins. The Act delineates oversight responsibilities between federal and state regulators, and lays the groundwork for banking authorities to develop rules and guidelines for stablecoin issuers.
- This publication explores six key questions surrounding stablecoins, including their design, applications, and limitations per BofA Global Research, as interest in their role within the digital economy continues to grow.
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