Hey there, financially‑curious friends! 👋

If you’ve seen stablecoins popping up in crypto headlines recently, you’re not alone – 2025 is shaping up to be their moment. But what exactly are they – and why should you care?
Let’s break it down, Mognito‑style: simple, logical, and all about your money. 🧠💰

What Are Stablecoins, Anyway? 🤔

Think of stablecoins as a quieter cousin to Bitcoin. While crypto like Bitcoin and Ethereum can bounce up and down wildly, stablecoins are designed to stay steady – pegged to something real, like the US dollar or gold. That means 1 stablecoin ≈ £1 (or $1), every time.
So if Bitcoin is a rollercoaster 🎢, they are more like a bus on a quiet road.

How Do They Work? ⚙️

There are several flavours of stablecoins:

• Fiat-backed: Backed 1:1 with real fiat money (e.g., USDT, USDC, TrueUSD)
• Asset-backed: Pegged to commodities like gold (e.g., Paxos Gold – PAXG)
• Crypto-backed: Collateralised with other cryptocurrencies (e.g., DAI)
• Algorithmic: Use smart contracts to keep value steady – but they’re riskier (e.g., Frax, formerly TerraUSD)

Each type has its pros and cons, depending on how secure and transparent they are.

Why Are They Gaining Attention? 🌎

Stablecoins solve a big problem: volatility.
Want to send money globally without losing value mid‑transfer? They make it quick and cheap.
Want to move in and out of crypto easily? Swap to them and you avoid price swings.
Want fast peer‑to‑peer payments? They are digital cash for the internet.
They’re already being used for:

• International transfers
• Crypto trading as a “parking space” between coins
• Emerging fintech apps and services

What’s New in 2025? – GENIUS Act & UK Moves 📰

GENIUS Act
In June 2025, the US Senate passed the GENIUS Act by 68–30, creating the first federal stablecoin framework.

Key points:

• Requires full 1:1 reserves in cash or US Treasuries
• Mandates regular audits, consumer protections, and clear issuer rules
• Only approved issuers (banks, fintechs) can issue stablecoins
• State and federal joint oversight; larger issuers face stricter rules

The House is expected to vote during “Crypto Week” in mid‑July.

UK Regulation
Meanwhile in the UK:

• The FCA has been beefing up its oversight, including new consultation papers on stablecoin issuance and custody.
• The Treasury is crafting a statutory instrument to bring regulated stablecoins under the same rules as traditional financial products.
• Only UK‑based stablecoin issuers will need FCA approval, meaning imported stablecoins (like USDC or USDT) remain accessible.

Globally, regulators are converging on similar rules: full reserves, audits, no interest payments, and parity protection.

Should You Use Them? 🧠

Use them if you want:

• Fast, cross‑border transfers
• Stability while trading crypto
• Access to new fintech tools and apps

Be cautious if:

• You assume all stablecoins are fully backed
• You don’t understand how their reserves or audits work
• You’re considering algorithmic varieties (those can collapse)

There are many stablecoins out there – from fiat-backed ones like USDT, USDC, and TrueUSD, to decentralised or crypto-backed ones like DAI. Others, like PAXG, track gold. Each comes with its own model and level of transparency, so it’s important to understand how they’re structured before using them.

Mognito doesn’t recommend any specific stablecoin – but we do recommend knowing what you’re holding. 🧐

The Mognito Take 💭

Stablecoins aren’t a cure‑all – but they are a stepping stone between traditional money and digital innovation. With regulators in the US (GENIUS Act) and UK tightening the rules, now’s the time they could go mainstream.

💡Smart money moves:

• Learn how they work before using them
• Understand reserve structures and legal protections
• Use them for what they’re made for – payments, transfers, and trading, not hype
• Keep up with regulation – the landscape is shifting fast

At Mognito, we’re here to help you navigate the changing financial world – because everyone deserves to understand the future of money.

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