Stablecoins: Proceed with caution

Learning how stablecoins and other digital assets work is like learning a strange new language. Blockchain is what happens when a chain-link fence gets twisted. Web3? “World Wide Web” already had three Ws. And DeFi is just a terrible DJ name.

Strange lexicon aside, stablecoins—a type of cryptocurrency typically pegged to fiat currency such as the US dollar—are catching on. The Genius Act brought regulatory clarity to stablecoins, while major payments companies like PayPal and Mastercard are making inroads with them. Experts we spoke with said stablecoins have true benefits and opportunities for organizations, meaning that CFOs can’t afford to dismiss them.

Crypto’s cousin. Stablecoins are a sort of bridge between traditional currency and the crypto world. As payments company Stripe explains, stablecoins aim to provide the benefits of crypto—think, quick settlement prices and lower transaction costs—while reducing the volatility that other cryptocurrencies like Bitcoin can experience.

“If you’re dealing with a contractor in South Africa, for example, it significantly reduces the cost and time spent to make a payment like this happen,” Andrei Belonogov, founder of TechAccountingPro, a technical accounting firm for digital assets companies, told CFO Brew.

There are a few types of stablecoins. Most of them, including big ones like Tether (USDT) and USDC, are backed by reserves of fiat currency. Some are collateralized by other cryptocurrencies but built to be less volatile (source: Trust us, bro), while others (called algorithmic stablecoins) adjust supply for price stability.

Status update. Stablecoins have a market capitalization of $302 billion, according to RWA.xyz, which tracks tokenized real-world assets. Their market cap at the end of 2025 was more than double the previous year, Moody’s noted in a February report. Financial institutions are increasingly using stablecoins “for instant payments, collateral transfers, and intraday liquidity, turning them into a regular feature of global financial systems,” the ratings agency added.

Major governments have passed regulations that bring clarity to stablecoins, including the US’s Genius Act and the EU’s Markets in Crypto Assets Regulation (MiCA). Following the Genius Act, which lawmakers passed last year, US regulators are crafting rules around stablecoins, according to Di Krupica, senior manager of assurance and advisory innovation, specializing in digital assets, at the AICPA.

“That growing clarity for rules is giving entities the confidence to now participate and move forward with their stablecoin projects they might have had on the table for a while,” Krupica told us in March.

Shiny object syndrome. Just like companies shouldn’t dive headfirst into AI investments without a plan, organizations shouldn’t adopt stablecoins before weighing the benefits and risks.

According to Belonogov, stablecoins carry some operational and cybersecurity risks that “can be materially different from traditional bank payments.” Stablecoins payments lack the anti-fraud safeguards that traditional funds transfers have, he said. Anyone who has access to an organization’s stablecoin “wallet” can make a payment to anyone, even a bad actor, and organizations are limited in their ability to recover misappropriated spending.

“This has created significant difficulties in managing employees, like changing people who are responsible for payments, and also in ensuring that there are several people who need to approve the payment before it’s sent,” Belonogov said.

No guarantee. Moody’s cautioned in its report that stablecoins “are not legal tender in most jurisdictions.” The Genius Act established that stablecoins are not guaranteed by the US government or insured by the FDIC. Stablecoins’ value depends on both “the quality of their underlying reserves and on the issuer’s ability to honor redemption requests.”

That means they’re more like credit instruments than actual money: They carry the risk of the underlying assets defaulting or significantly losing value.

“I would advise to not be overconfident,” Belonogov said. “If you get overconfident and just start buying anything that’s called stablecoins on [the] blockchain, you will likely lose your funds. Be very careful and pay very strong attention to every detail when you operate on blockchain, if you do it yourself directly without using professional help.”