What Are Stablecoins, and What Benefits Do They Offer to Businesses?

Cryptocurrencies were meant to allow users to move money without running into bank delays, holiday closures, or intermediary fees. While this goal was technically achieved, crypto itself experienced more volatility than originally expected. While this can create an exciting investment opportunity for everyday people, businesses can’t really use a currency that erratically swings in value to pay its employees and vendors.

Stablecoins solve that problem. By pegging their value to an asset like USD, stablecoins offer the speed and global reach of crypto without the price swings. That means business owners can send money across borders in minutes, avoid wire fees, and settle transactions outside banking hours without taking on the risk of holding volatile crypto.

In this guide, we’ll cover what stablecoins are, how they work, their different types, and the ways they can be useful for today’s businesses. Along the way, we’ll take a look at Slash, a business banking platform that comes with built-in stablecoin on/off ramps.¹,⁴ Slash allows users to send and receive USD-pegged stablecoins USDC and USDT across eight supported blockchains for faster, lower-cost global payments.

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What is a Stablecoin?

A stablecoin is a digital asset and type of cryptocurrency designed to maintain a stable value. While other forms of cryptocurrencies like Bitcoin experience major price fluctuations and volatility based on market swings, stablecoins maintain a stable value by being pegged to a reference asset. This asset is commonly a fiat currency like USD, commodities like gold, or other cryptocurrencies.

In practice, stablecoins function like a digital version of a fiat currency. They're native to blockchain networks, so they move with the speed and global reach of crypto. Because they're also collateral-backed, they can be very useful for common business transactions like paying vendors, settling invoices, and sending payroll internationally. You can get the settlement speed and lower fees of crypto without the unpredictability of a digital token like Bitcoin.

How do stablecoins work, and how do they maintain their value?

Stablecoins maintain their stability through a process called pegging, wherein the value of one stablecoin is tied to the value of another, more stable asset. This peg is often to a fiat currency like USD, but it may also tie to a physical asset like gold. Popular stablecoins for US and US-affiliate businesses include USDC (USD Coin) and USDT (USD Tether), two stablecoins that are pegged 1:1 to USD.

This works through a pair of processes known as minting and burning. When an issuer like Tether wants to create $100 of USDT, they’ll first deposit $100 into a reserve account, then issue 100 USDT on-chain. The token always has a corresponding dollar held in reserve. When a holder wants to redeem stablecoin for cash, the tokens are burned (removed from circulation) and the equivalent amount is released from reserves, keeping the supply and reserve in balance.

This process can vary for different types of stablecoins. For example, crypto-collaterized stablecoins will mint reserves of other crypto assets, and algorithmic stablecoins will mint and burn automatically in order to keep the value of the stablecoins steady.

Types of Stablecoins

Each type of stablecoin is distinguished by the asset it’s backed by. Here are the four main varieties of stablecoin in circulation today:

Fiat-collateralized stablecoins

Fiat-collateralized stablecoins are tokens backed by fiat currencies like USD, EUR, or JPY. The most common examples of these are USDT (Tether) and USDC (Circle), which are pegged 1:1 to USD.

This type of stablecoin comes with several benefits for businesses, including easier global transactions without the need to move through banks that tack on fees and slow down your transfers. Additionally, fiat-collateralized stablecoins can often be integrated into your digital banking systems. If you’re using Slash, for example, you can send and receive USDT and USDC, then on- or off-ramp it right on the platform.

Crypto-collateralized stablecoins

Crypto-collateralized stablecoins are backed by other cryptocurrencies rather than fiat. Because the underlying collateral can be volatile, these stablecoins are typically “over-collateralized”. That means the reserve holds more crypto value than the amount of stablecoin issued, thus creating a buffer against price swings.

Popular crypto-collateralized stablecoins include DAI and LUSD (Liquidity USD), both offering stablecoins pegged to Ethereum as collateral. If your business is already familiar with crypto and blockchain environments, crypto-collateralized stablecoins can make it easier to use familiar currencies without the volatility risks.

Algorithmic stablecoins

Algorithmic stablecoins make use of algorithms to monitor and maintain the supply of stablecoins, ensuring that their value stays stable against fluctuating demand.

This category includes hybrid models like FRAX, which combines partial collateral backing with algorithmic controls. Algorithmic stablecoins have a bit of a mixed track record compared to its alternatives. Some, like TerraUSD in 2022, have lost their pegs during market stress events.

Commodity-backed stablecoins

Commodity-backed stablecoins follow a traditional model of money collateral, similar to the USD’s original store of value in gold. This type of stablecoin is tokenized to represent a certain, stable amount of a physical commodity such as gold. While they may experience price fluctuations, they can be beneficial for investors and businesses seeking easier access to commodities without dealing with physical ownership.

Why Stablecoins Matter to Small Businesses

If you’re a business owner with a wide array of clients and vendors, sending money quickly without heavy fees can become very important. This becomes a particular challenge when your business partners are from other countries.

Traditional international wire transfers can take two to five business days, cost $25 to $50 or more per transaction, and don't process on weekends or bank holidays. Stablecoin transfers settle in minutes or seconds on most networks, run around the clock, and can cost a dollar or two. Every transfer can save you time and money.

The other advantage is stability. If you're holding or sending value in a volatile cryptocurrency like Bitcoin, you're taking on currency risk with every transaction. USD-pegged stablecoins let you hold and move dollars without having to worry about volatility, which makes them practical for B2B payments and large financial transfers from one entity to another.

Benefits and risks of stablecoins

While stablecoins are specifically designed to minimize risk, the universe of crypto as a whole comes with some challenges. Let’s take a look at the benefits and risks you’ll be weighing as you consider integrating stablecoins into your operations:

Benefits:

Fast, low-cost international transfers: Businesses can send and receive payments across borders in minutes, often without the transfer costs and delays that you’ll commonly run into with ACH and international wire.
Steady value: Because stablecoins are pegged to assets like fiat currencies (USD), they’re a consistent currency fit for familiar business operations like payroll, vendor payments, and account transfers.
Access to DeFi platforms and interest-bearing accounts: When holding stablecoins, businesses can access decentralized finance (DeFi) platforms and blockchains for lending, trading, and more, without traditional regulators and centralized bodies. These platforms use smart contracts, which are self-executing programs that can be set to complete tasks autonomously.
24/7 accessibility outside of traditional banking hours: Bank closures and holidays in the US can affect your ability to make fast payments on the spot. Stablecoins let you quickly pay a vendor in Asia even if it’s Labor Day in the US, saving you time and money with lower foreign exchange rates.

Risks:

Regulatory uncertainty: Stablecoin regulation is still evolving. While 2025’s GENIUS Act established a basic framework within the US, the bigger picture continues to develop. Committing to stablecoins often means keeping an eye on local rules and guidelines.
Counterparty or reserve risk: The value of stablecoins is maintained by pegs to real collateral in cash reserves, treasuries, etc. However, if those issuers don’t maintain their reserves, the peg can break.
Lack of deposit insurance: Stablecoin holdings lie outside insured bank networks and accounts, meaning they’re more vulnerable than fiat is when in a standard bank account. Keeping operating funds in crypto can be a little riskier than keeping them in an FDIC-insured account.
Tech and wallet management complexity: Stablecoins and crypto involve a learning curve that can be confusing for first-time users. Additional support through platforms like Slash can help you ease into the crypto space with integrated fiat and crypto financial management.

How Slash Can Help You Get Started With Stablecoins

Stablecoin usage in business is growing, and the regulatory environment is catching up. According to a 2026 report from Crybrid, 42% of businesses are using stablecoins for cross-border payments, and 88% are interested in adopting them within the next 12 months. But what’s the first step?

Start with Slash. Slash is a modern financial platform that offers built-in on/off ramps for USDC and USDT, allowing users to convert their fiat into crypto and send it overseas faster than they can through SWIFT or ACH. We also offer our own USD pegged stablecoin, USDSL, which is backed by U.S. Treasury bills and USDC.³ Eligible Slash users have access to a custodial wallet that isn’t connected to an exchange and can be used for payments and native cash conversion.

As businesses exchange stablecoin payments with their suppliers and partners, all transactions are visible and trackable alongside each other in real time on the Slash dashboard. Wire transfers, employee card spend, incoming/outgoing invoices, and crypto payments are all managed in the same place.

We offer quite a few more features outside of the realm of crypto, including:

Working capital financing: Access short-term financing with flexible 30-, 60-, or 90-day repayment terms to help bridge cash flow gaps.⁵
Agentic AI: Our platform comes with Twin, a built-in AI agent that can be prompted with natural language to complete complex tasks. Users can ask it to create cards, pay invoices, review your cash flow, and much more.
Slash Visa® Platinum Card: The Slash Card is a corporate charge card that allows you to set customizable spending controls and issue unlimited virtual cards for handling team expenses, vendor payments, subscriptions, and more. Users can also earn up to 2% cash back on business purchases.
High-yield treasury: Earn up to 3.82% annualized yield on idle funds with money market investments from BlackRock and Morgan Stanley, managed directly within your Slash account.⁶
Accounting & ERP integrations: Sync transaction data with QuickBooks Online, Xero, NetSuite, or Sage Intacct to streamline reconciliation, reporting, and month-end close.

Reach out to Slash today to learn more about how stablecoins can save you time, money and sanity.

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Frequently asked questions

What is the best stablecoin?

There's no single “best” stablecoin. Ultimately, the right one depends on your use case. For US-based businesses or those transacting primarily in USD, fiat-collateralized stablecoins like USDC and USDT are practical options due to their high liquidity and wide acceptance.

Is a stablecoin the same as Bitcoin?

Nope. Bitcoin is an independent cryptocurrency with its own blockchain and fixed supply, and its price fluctuates significantly based on market activity. Stablecoins are designed to maintain a consistent value by being pegged to a reference asset. They serve different purposes: Bitcoin is primarily used for investment and as a store of value, while stablecoins are designed for transactions and payments.

Is a stablecoin worth a dollar?

USD-pegged stablecoins like USDC and USDT are designed to maintain a 1:1 ratio with the US dollar, meaning 1 stablecoin equals $1. While extreme market conditions can technically shake things up, you can count on major fiat-collateralized stablecoins to hold this peg consistently for everyday business use.