What to know about stablecoins after Hong Kong passes law to regulate the popular tokens

Five key questions about the stablecoin cryptocurrency token are answered

The cryptocurrency industry has continued to advance, with bitcoin prices hitting a record high earlier this week. Stablecoins have come under the spotlight as regulators in Hong Kong and the US push for legislation for the popular tokens.

Here we answer five common questions about stablecoins.

What are stablecoins and how are they used?

Stablecoins are a type of cryptocurrency token that maintain a fixed value by being pegged to a reference asset, typically fiat currencies such as the US dollar. Issuers achieve this by holding reserve assets, such as US Treasury bills, which provide 1:1 backing for the total value of the tokens.

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The use of stablecoins have grown more prevalent along with the increased popularity of cryptocurrencies, as traders use them to hedge against major swings in prices. They can also move their capital among different assets or platforms without the need to convert back to fiat currencies.

An increasing number of businesses around the world are using stablecoins for cross-border payments and remittances, particularly in emerging markets with large underbanked populations.

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