What is a stablecoin? A precise field guide to the five categories

Most “what is a stablecoin” explainers lump legally-incompatible things into one category. USDC and JPM Coin (now Kinexys Digital Payments) both peg to a dollar, both move on a blockchain, both call themselves stablecoins -- and they are completely different objects in law. If you only need a two-minute explainer, the lumping is fine. If you're deciding which to use, the lumping is what makes the decision wrong.

Token vs stablecoin: the containment relationship

Start with the easy part. A token is any digital asset issued on a blockchain that represents some value or right. A stablecoin is a specific kind of token whose value is held stable against some external reference -- almost always the US dollar. Every stablecoin is a token. Not every token is a stablecoin.

The useful framing is that “token” describes a representation method, not an asset class. Cash, a bank deposit, an e-money balance, and a tokenised deposit can all represent the same $100; the legal substance is different in each case even though the displayed number is identical. The chain is plumbing. The legal substance is what determines who owes you what and what happens if it breaks.

That distinction is the entire point of this guide.

The five categories that actually matter

Almost every dollar-pegged token in production today fits one of five categories. The differences between them are not technical -- they're legal. Who issues it, what backs it, what claim you hold if it fails.

The category boundaries are not always crisp -- a fully-collateralised algorithmic design can look like a private stablecoin from the user side -- but each category has a different default failure mode and a different default regulator. That is what makes the distinction load-bearing.

Private stablecoins (USDC, USDT)

A non-bank issuer -- a non-bank company (Circle, Tether) or a non-depository trust company (Paxos for PYUSD, BitGo for some smaller issuers) -- issues a dollar-pegged token. The issuer holds a reserve pool, typically cash, Treasury bills, repo, and a small allocation to other instruments, that is supposed to be 1:1 against tokens in circulation. The token is your claim on that reserve pool. None of these issuers is FDIC-insured as a bank, none takes deposits in the commercial-banking sense; the category name “non-bank” is the load-bearing word.

This category is the largest by far. As of mid-2026, USDT and USDC together hold roughly 80–85% of all stablecoin supply, with USDT in the 55–60% range and USDC in the 20–25% range; the current live numbers sit on DeFiLlama's stablecoin dashboard. We cover the strategic split between USDC and USDT in Two stablecoin worlds (USDC dominates regulated developed markets; USDT dominates emerging-market retail), and the deeper story of Tether the company in Tether's strategy.

Within this category, MiCA-regulated e-money tokens (EMTs) in the EU are a regulated sub-shape worth naming separately. Société Générale's EUR CoinVertible, issued by SG-FORGE under an Electronic Money Institution licence, is the canonical example -- the legal substance is closer to a private stablecoin under bank-grade supervision than to a deposit token issued from the bank's own balance sheet. EMTs sit in this Category 1 row, not Category 2 below, even though the issuer is bank-affiliated.

The legal substance worth keeping in mind: you are an unsecured creditor of the issuer with a statutory priority claim against the required reserve pool. The reserve pool is the issuer's balance-sheet asset; your token is a liability the issuer owes you. If the issuer fails, the GENIUS Act grants holders superpriority-style standing against reserves on its face — though academic bankruptcy commentary (notably Adam Levitin's Credit Slips analysis) argues holders effectively rank fifth in practice, behind repo, DIP, professional-fee, and set-off claims. Either way, priority against reserves is not deposit insurance, and the resolution path is untested in court. We cover the regulatory frame and the priority debate in detail in GENIUS Act, CLARITY Act, and what they mean for USDC senders.

Tokenised bank deposits (JPM Coin, Tochika)

Here is the category that gets routinely confused with private stablecoins. A licensed bank issues a token that represents an actual deposit on that bank's balance sheet. The token is not a claim on a separately-held reserve -- the token is the deposit, just represented on a blockchain instead of in a database row.

That distinction matters because the deposit is covered by whatever depositor-protection regime applies to the issuing bank. In the US, FDIC insurance up to $250K per depositor applies to the underlying deposit in the same way it would apply to a regular checking account -- the bank is the FDIC member, and the token-holder is the depositor. The legal substance is not “token of a bank deposit.” The legal substance is “a bank deposit.”

Caveat worth stating because the simple version above can mislead: whether FDIC (or non-US equivalent) coverage actually reaches a given token holder depends on the issuing bank, the account structure, recordkeeping at the bank, and whether the holder is legally the depositor of record on the underlying account. Most current tokenised-deposit deployments are institutional B2B with balances well above the $250K limit, where pass-through insurance is a small fraction of total exposure anyway. Don't infer retail-grade deposit insurance from the “a bank deposit” framing without confirming the account structure.

This is also the category where the user-facing market is least mature. Production deployments are mostly B2B -- JPMorgan's Kinexys platform (formerly Onyx) runs the consolidated business unit that includes JPM Coin settlement, reporting multi-billion-dollar daily volumes per JPMorgan's public materials, all institutional. Hokkoku Bank's Tochika in Ishikawa Prefecture is the notable retail outlier in Japan. We map the three patterns of issuance -- mega-bank B2B, multi-bank common rail, regional retail -- in Tokenised deposits: the third kind of stablecoin.

Crypto-collateralised (DAI, LUSD)

A smart contract or DAO accepts other crypto assets (ETH, wBTC, liquid staking tokens) as over-collateral and issues a dollar-pegged token against them. The peg is maintained by liquidations: if the collateral value falls toward the loan-to-value threshold, positions are liquidated to bring the system back into balance.

The legal substance is sharply different from the bank or non-bank cases above. There is no single issuer to sue; the “reserve” is locked smart-contract collateral visible on chain; the “regulator” is the protocol's governance token holders. Operational risk shifts from balance-sheet management to smart-contract correctness and oracle integrity.

Crypto-collateralised stablecoins are mostly used inside DeFi rather than for payments and remittance. DAI is the canonical example; LUSD and sUSD have smaller but active user bases. Total supply across this category is roughly $5–10B -- material but small relative to the private-stablecoin category. Live figures sit on DeFiLlama's crypto-backed stablecoins page.

Algorithmic and hybrid (FRAX, Ethena)

The category most often dismissed as “Terra failed, therefore the whole approach is dead.” That dismissal was defensible in 2022 and is less defensible in 2026. Terra-style purely-algorithmic pegs (seigniorage-shares mechanics with no external collateral) did indeed collapse, taking ~$60B in market cap with them.

Modern designs in this category combine collateralisation with market mechanisms. FRAX moved from partially-collateralised to fully-collateralised over its versions; crvUSD uses a continuous liquidation curve rather than the threshold liquidation DAI uses. None of these is risk-free, but they are not the same animal as Terra.

Ethena USDe is the case worth understanding separately. The mechanism is not “algorithmic” in the Terra sense at all -- USDe is collateralised by spot crypto (ETH, BTC, liquid-staking tokens) and simultaneously holds short perpetual-futures positions of equal size on the same underlying. The combined position is delta-neutral, so a dollar fall in collateral value is matched by a dollar gain on the short. The peg comes from the offsetting positions, not from a seigniorage-shares mint/burn loop. The yield comes from the funding-rate carry between spot and perpetual futures. This is a real, novel mechanism -- and it is what makes USDe sit awkwardly in the “stablecoin” bucket: a yield-bearing instrument with funding-rate exposure starts to look more like a structured-product token than a payment stablecoin. The GENIUS Act explicitly excludes yield-bearing tokens from the payment-stablecoin category.

CBDC (central bank digital currency)

A central bank issues a digital version of its own legal tender. The holder's claim is directly against the central bank, not against any commercial intermediary. This is the most legally crisp of the five categories -- it's simply sovereign money in digital form -- and the most politically complex to deploy.

Production CBDCs are rare in 2026. China's e-CNY is the largest deployment, with retail and B2B usage primarily domestic. The Bahamas' Sand Dollar and a handful of small-economy deployments are live but tiny. The digital euro is in its design-phase pilot and a digital yen is in pilot, with neither deployed for retail use; the United States has no operational CBDC and no clear timeline for one.

For US→Philippines retail remittance, CBDCs are not yet a practical option. The Philippines' central bank (BSP) has a project Agila that targets B2B wholesale tokenisation, not a retail peso CBDC; the US has no retail USD CBDC; cross-border CBDC interoperability via mBridge (the multi-CBDC project run by PBoC, HKMA, Bank of Thailand, UAE Central Bank, and Saudi Central Bank, after the BIS withdrew in late 2024) does not include either country today.

Three common confusions worth getting right

Most coverage of stablecoins reproduces one or more of these. Once you've seen the five-category split, they're easy to spot.

“USDC is FDIC insured”

No. Circle holds part of its reserves as cash deposits at FDIC-insured banks. Those deposits are insured to Circle as the corporate depositor, not pass-through to USDC holders. If Circle failed, you would be a creditor in the bankruptcy, not an insured depositor. The 1:1 reserve rule reduces failure probability; it does not transform USDC into a bank deposit.

The category that is covered by depositor protections is tokenised bank deposits -- because there, the underlying deposit is a regular bank deposit and the token is just its representation. If a tokenised bank deposit is held at an FDIC-insured bank, the underlying deposit is covered by FDIC up to the standard $250K per-depositor limit, the same way a regular bank deposit is. For institutional users whose balances are well above that limit, the practical insurance is small -- but the legal regime is depositor-style rather than creditor-style. That distinction matters in bankruptcy; the dollar amount of insurance often doesn't. Same word, “stablecoin,” very different answer to “is it insured.”

“JPM Coin is the bank-issued version of USDC”

Misleading. JPM Coin and USDC are different legal objects, not different brands of the same thing. USDC is a non-bank-issued token backed by a separately-held reserve; JPM Coin is a tokenised bank deposit. The failure modes, regulators, and user protections are different. The user experience can look similar -- both display as $1, both move on a chain -- but the substance is not.

“All stablecoins are crypto”

Half-true and increasingly unhelpful. Stablecoins use blockchain technology, which is also used by cryptocurrencies. That doesn't mean a tokenised bank deposit is “crypto” in any meaningful sense. JPM Coin is a regulated bank product. Tochika is a regional bank product. Bundling them with Bitcoin in a sentence describes a shared technology layer and obscures everything else that matters.

Why the precise taxonomy matters

Four reasons a precise taxonomy is more than pedantry.

• Failure modes differ. A private-stablecoin de-peg is an issuer-credit event; a tokenised-deposit failure is a bank-failure event; a crypto-collateralised de-peg is a smart-contract or oracle event; an algorithmic de-peg is a market-mechanism event. The same word covers four very different ways of losing money.
• Regulators differ. Private stablecoins now fall under the GENIUS Act in the US and MiCA in the EU. Tokenised deposits fall under standard bank supervision (OCC, FDIC, state banking departments). Crypto-collateralised stablecoins fall under whatever DeFi regulation eventually lands -- still mostly unwritten. CBDCs fall under central-bank mandate.
• Use cases differ. Private stablecoins dominate cross-border retail and emerging-market payments. Tokenised deposits dominate B2B treasury and corporate settlement. Crypto-collateralised stablecoins dominate DeFi. Algorithmic / hybrid stablecoins dominate on-chain yield strategies. CBDCs barely dominate anywhere yet.
• Operator integration is different. A remittance platform integrating USDC has a one-counterparty problem (Circle plus its banking partners). The same platform integrating tokenised deposits has a many-counterparty problem (every issuing bank is its own integration). The same platform integrating a CBDC has a sovereign-counterparty problem (regulatory clearance for cross-border use). These are not interchangeable engineering decisions.

What this taxonomy tells you about US→Philippines remittance

Sorting the existing US→PH stablecoin route by category makes the corridor's actual shape easier to see.

• Sender side, regulated rails: the practical stablecoin option is private stablecoin (USDC via Coinbase) -- Category 1. Walked through in detail in our anchor guide.
• Recipient side, retail market: the dominant on-chain dollar in retail circulation appears to be also a private stablecoin (USDT) -- Category 1. Filipino retail crypto users seem to hold USDT predominantly, through Binance P2P, informal OTC, and Coins.ph rather than USDC. This is editorial judgment, not a measured share -- we don't have a published P2P/OTC order-book dataset for PHP, and the operator's evidence here is conversational rather than measured. Treat the framing as a working hypothesis; if you have measured data, send it via the contact link in the footer.
• Tokenised deposits (Category 2) are not retail cross-border yet. JPM Coin and DBS Token Services settle huge B2B volumes but don't touch consumer remittance. The Philippines doesn't have a retail tokenised peso deposit. The earliest plausible appearance would be Asia-corridor mega-bank deposit tokens (HSBC, DBS, Standard Chartered) reaching the Philippines, or BSP's Project Agila extending into a retail peso layer.
• Crypto-collateralised (Category 3) and algorithmic (Category 4) don't materially serve this corridor. DAI and similar are payable in principle but Coins.ph doesn't list them for retail off-ramp.
• CBDCs (Category 5) don't exist for this corridor. No US retail CBDC; BSP's digital peso remains exploratory.

The summary: the US→PH stablecoin route runs almost entirely on Category 1 (private stablecoins) -- USDC on the regulated send side, USDT in the retail receive-side market. The other four categories are either confined to other use cases (Categories 2–4) or not yet deployed in either country (Category 5). That's the corridor's actual shape, even though most coverage groups USDC, USDT, and JPM Coin together as “stablecoins.”

Bottom line

Five categories, four of which are commonly mislabelled as the fifth. If you only remember one thing: a private stablecoin and a tokenised bank deposit are different legal objects with different protections, even though they both display as $1. The chain part is shared technology. The rest is not.

For the corridor we cover, this taxonomy is mostly about understanding what doesn't apply yet. Categories 2–5 are real and growing in their own niches but don't serve the US-based retail sender to the Philippines today. The live calculator keeps tracking the route a sender can actually use right now; when a new category lands in the corridor, that's where it will first show up.

Companion pieces: Two stablecoin worlds (the USDC/USDT split within Category 1), Tether's strategy (the largest Category 1 issuer), Tokenised deposits (Category 2 in depth), GENIUS Act, CLARITY Act (the regulatory frame around Category 1).