{"id":53796,"date":"2026-06-26T16:16:48","date_gmt":"2026-06-26T10:46:48","guid":{"rendered":"https:\/\/www.tatacapital.com\/blog\/?p=53796"},"modified":"2026-06-26T16:17:56","modified_gmt":"2026-06-26T10:47:56","slug":"stablecoin","status":"publish","type":"post","link":"https:\/\/www.tatacapital.com\/blog\/wealth-services\/stablecoin\/","title":{"rendered":"What are Stablecoins and How are They Used in India?"},"content":{"rendered":"\n<p><\/p>\n\n\n\n<p><em>Summary<\/em><\/p>\n\n\n\n<p><em>Stablecoins are digital currencies that are attached to reserve assets like national currency, gold, government securities, etc. Being blockchain-based, stablecoins maintain the digital currency benefits while minimizing the notorious crypto volatility. Stablecoins can be currency-backed, commodity-backed, crypto-backed, or in algorithmic forms. India is planning to launch its stablecoin, ARC, which will ride on the <\/em>Reserve Bank of India\u2019s (<em>RBI&#8217;s) Central Bank Digital Currency (CBDC) ecosystem.<\/em><\/p>\n\n\n\n<p>Stablecoins are digital currencies that are linked to a reserve asset, thus reducing price volatility while retaining blockchain efficiency.<\/p>\n\n\n\n<p>Popular cryptocurrency, Bitcoin, has an annualized volatility of more than 40%. Fluctuating purely on the balance of supply and demand, this decentralized currency is known for its volatility. Cryptocurrency can shed this volatility if a reserve asset is attached to it.<\/p>\n\n\n\n<p>Stablecoins do exactly that by maintaining a link to a reserve asset. Such a reserve asset can be fiat currencies, commodities or financial instruments.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Stablecoin?<\/strong><\/h2>\n\n\n\n<p>Stablecoin is a highly practical innovation in the digital asset ecosystem. Its link to a reserve asset ensures that it maintains a relatively stable value. Stablecoin meaning is ingrained in two key words: \u201cprice stability\u201d.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Stablecoin price may be pegged to underlying assets such as<\/strong><\/h3>\n\n\n\n<ul>\n<li>US Dollar<\/li>\n\n\n\n<li>Euro<\/li>\n\n\n\n<li>Gold<\/li>\n\n\n\n<li>Government securities<\/li>\n\n\n\n<li>Other cryptocurrencies, etc.<\/li>\n<\/ul>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/eligibility-to-withdraw-pension-contribution-in-epf\/\">Fundamentals of pension withdrawal<\/a>&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is a stablecoin development company?<\/strong><\/h2>\n\n\n\n<p>A stablecoin development company develops digital currencies that can be pegged to a reserve asset. They ensure that the stablecoin is customized, secure and updated with the regulations. A stablecoin development company manages the end-to-end infrastructure of the stablecoin, which includes<\/p>\n\n\n\n<ul>\n<li>Smart contract creation<\/li>\n\n\n\n<li>Liquidity planning<\/li>\n\n\n\n<li>Reserve management, and<\/li>\n\n\n\n<li>Multi-chain deployment<\/li>\n<\/ul>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/ulip-plan\/\">What is a ULIP Plan?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why was a stablecoin developed?<\/strong><\/h2>\n\n\n\n<p>Traditional cryptocurrencies have been struggling to maintain stability and have experienced extreme short-term volatility. Stablecoins were introduced primarily to address this challenge.<\/p>\n\n\n\n<ul>\n<li>Stablecoins reduce exposure to market fluctuations.<\/li>\n\n\n\n<li>It allows blockchain-based transactions.<\/li>\n\n\n\n<li>It supports Decentralized Finance (DeFi) applications.<\/li>\n\n\n\n<li>It enables faster cross-border remittances.<\/li>\n\n\n\n<li>It adds liquidity to the crypto market.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the different types of stablecoins?<\/strong><\/h2>\n\n\n\n<p>The table below explains the different types of stablecoins, with examples.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Type<\/td><td>Feature<\/td><td>Example<\/td><\/tr><tr><td>Fiat-collateralized stablecoins<\/td><td>They maintain reserves of fiat currencies<\/td><td>USDT (Tether), FDUSD (First Digital USD)<\/td><\/tr><tr><td>Commodity-backed stablecoins<\/td><td>They track the value of physical assets<\/td><td>PAG (PAX Gold), KAG (Kinesis Silver)<\/td><\/tr><tr><td>Crypto-collateralized stablecoins<\/td><td>They track the value of cryptocurrencies<\/td><td>DAI (Ethereum blockchain-based stablecoin)<\/td><\/tr><tr><td>Algorithmic stablecoins<\/td><td>Price stability is maintained through algorithms and supply adjustments<\/td><td>FRAX (backed fractionally by algorithm and collaterals)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/saving-schemes-for-girl-child\/\">Saving Schemes for the girl child in India<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Which are the most popular stablecoins in the world?<\/strong><\/h2>\n\n\n\n<p>A list of stablecoins that are among the most popular in the world as of now is provided below:<\/p>\n\n\n\n<p><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Stablecoin<\/td><td>Pegged Asset<\/td><td>Category<\/td><td>Primary Use<\/td><\/tr><tr><td>USDT (Tether)<\/td><td>US Dollar<\/td><td>Fiat-backed<\/td><td>Trading and payments<\/td><\/tr><tr><td>USDC<\/td><td>US Dollar<\/td><td>Fiat-backed<\/td><td>Institutional and retail transactions<\/td><\/tr><tr><td>DAI<\/td><td>US Dollar<\/td><td>Crypto-backed<\/td><td>Decentralized finance<\/td><\/tr><tr><td>FDUSD<\/td><td>US Dollar<\/td><td>Fiat-backed<\/td><td>Exchange settlements<\/td><\/tr><tr><td>PAX Gold (PAXG)<\/td><td>Gold<\/td><td>Commodity-backed<\/td><td>Gold exposure through blockchain<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The table also indicates the specific transactional or investment usage of stablecoins.<\/p>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/cagr-in-mutual-fund\/\">What is CAGR in mutual funds?<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Where does India stand in stablecoin use and development?<\/strong><\/h2>\n\n\n\n<p>The RBI- was quick to announce the launch of its digital currency, CBDC-. However, it has maintained a cautious approach towards stablecoins. However, the Asset Reserve Certificate (ARC) is tipped to be India\u2019s very own stablecoin.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Here are a few basic details on ARC:<\/strong><\/h3>\n\n\n\n<ul>\n<li>ARC will track the value of the Indian National Rupee.<\/li>\n\n\n\n<li>It will be collateralized 1:1 against cash and cash equivalents such as government securities and treasury bills.<\/li>\n\n\n\n<li>WazirX, Polygon and fintech firm Anq are involved in the design and development of the ARC.<\/li>\n\n\n\n<li>ARC will have a two-tier framework. The CBDC will handle final settlements, while ARC will provide a layer for programmable payments, smart contracts, and decentralized finance.<\/li>\n\n\n\n<li>ARC will be expected to curb the outflow of domestic liquidity to USD-backed stablecoins.<\/li>\n\n\n\n<li>ARC will initially be rolled out to meet the needs of corporate and institutional accounts.<\/li>\n<\/ul>\n\n\n\n<p>Like elsewhere, a stablecoin in India is expected to be used for international remittances and business payments, merchant settlements, treasury management, digital asset trading, etc.<\/p>\n\n\n\n<p>Also, read &#8211; <a href=\"https:\/\/www.tatacapital.com\/blog\/wealth-services\/types-of-mutual-funds\/\">Types of mutual funds in India<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Final word<\/strong><\/h2>\n\n\n\n<p>Stablecoins are a significant development in the blockchain-based financial ecosystem. Stablecoins provide the efficiency of digital assets with the stability of traditional currencies. In India, blockchain adoption is at a nascent stage, and regulatory clarity is a work in progress. Nevertheless, it is an area that Indian investors and businesses need to keep a close watch on.\u00a0<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Summary Stablecoins are digital currencies that are attached to reserve assets like national currency, gold, government securities, etc. Being blockchain-based, stablecoins maintain the digital currency benefits while minimizing the notorious crypto volatility. Stablecoins can be currency-backed, commodity-backed, crypto-backed, or in algorithmic forms. India is planning to launch its stablecoin, ARC, which will ride on the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":53797,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[37],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Stablecoin - Meaning, Price, List &amp; How Stablecoins Work | Tata Capital<\/title>\n<meta name=\"description\" content=\"Learn what a stablecoin is, its meaning, price stability, popular stablecoins list, investment options, buying methods, and how stablecoins are created.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Stablecoin - 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