Why use stablecoins instead of dollars?

People use stablecoins instead of dollars in a bank mainly because stablecoins live on blockchains. That lets them move between crypto apps, across borders and outside banking hours in a way that bank money usually cannot. A stablecoin carries different risks from a bank account, though.

Why were stablecoins created?

Crypto prices swing widely, and traders needed somewhere stable to park value without cashing out to a bank. Federal Reserve Governor Christopher Waller said in a February 2025 speech that stablecoins were built to fill that gap. They give exchanges a faster, cheaper way to represent dollars, and Waller noted they were involved in more than 80% of trading volume on major centralized exchanges.

He also noted that about 99% of stablecoin value is tied to the US dollar, which is why the question is usually about stablecoins versus dollars.

What are stablecoins used for today?

Beyond trading, a Federal Reserve research note from April 2026 describes growing use in several areas:

• DeFi. Stablecoins are the main currency for lending, borrowing and trading apps on blockchains.
• Payments. Stablecoin transaction volume on Ethereum rose about 50% after the GENIUS Act became law in July 2025, and cross-border use is growing.
• Small holders. Wallets holding $1,000 or less in stablecoins grew substantially during 2025.
• Funding brokerage accounts. Interactive Brokers began accepting USDC deposits in January 2026.

The note put total stablecoin value at about $317 billion as of April 6, 2026. Waller added that stablecoins could appeal to people in high-inflation countries, or to those who lack easy access to dollar cash or bank accounts. He said everyday retail payments with stablecoins remained very limited.

How do stablecoins compare with bank transfers?

The main differences are timing, reach and cost.

Blockchains run all the time. The Fedwire Funds Service, the Federal Reserve system banks use for large transfers, does not run on Sundays or weekday holidays today. The Fed has said it plans to add those days, with the change coming in 2028 or 2029. Our guide to how long a crypto transfer takes covers blockchain timing.

Sending money abroad through traditional channels can be expensive. The World Bank's Remittance Prices Worldwide database put the global average cost at about 6.4% of the amount sent in its September 2025 report. Waller described how stablecoins could make cross-border payments simpler and cheaper, provided anti-money-laundering and consumer safeguards are in place. A stablecoin transfer still has costs, such as gas fees and the charges to convert to and from local currency.

What are the trade-offs?

A bank deposit in the United States is covered by deposit insurance up to a limit. A stablecoin is not, as our guide to whether crypto is insured explains. Waller called stablecoins private money that is exposed to runs, and some have lost their peg, as described in what happens when a stablecoin depegs. The Fed's 2026 note adds that long chains of intermediaries make stress hard to spot. The issuer also keeps the interest on the reserves, as explained in how stablecoin issuers make money.