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Resources

Free tools, guides, and references to help you navigate the world of stablecoin trading.

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Glossary of Stablecoin Terms

Key definitions for the stablecoin ecosystem:

  • Stablecoin — A cryptocurrency designed to maintain a stable value relative to a reference asset (typically USD or GBP)
  • USDT — Tether, the largest stablecoin by market cap, pegged to the US Dollar
  • USDC — USD Coin, a fully-backed stablecoin issued by Circle
  • DAI — A decentralised stablecoin backed by crypto collateral, governed by MakerDAO
  • Depegging — When a stablecoin loses its peg to the target asset (e.g., drops below $1)
  • Arbitrage — Profiting from price differences of the same asset across different exchanges
  • Yield Farming — Earning returns by providing stablecoin liquidity to DeFi protocols
  • Liquidity Pool — A pool of tokens locked in a smart contract that enables decentralised trading
  • Slippage — The difference between expected and actual trade price
  • MiCA — Markets in Crypto-Assets Regulation, EU framework for cryptoassets including stablecoins
  • FCA — Financial Conduct Authority, the UK's financial regulator
  • CBDC — Central Bank Digital Currency, a digital currency issued by a central bank
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Frequently Asked Questions

Are stablecoins safe?

Stablecoins are generally considered less volatile than other cryptocurrencies, but they are not risk-free. Risks include depegging, smart contract failures, regulatory action, and issuer insolvency. Never invest more than you can afford to lose.

Do I need to pay tax on stablecoin trading in the UK?

Yes. HMRC treats stablecoins as cryptoassets. Capital Gains Tax applies to profits from disposal, and Income Tax may apply to staking or yield rewards. Consult a qualified tax advisor.

Which stablecoins are best for trading?

USDT and USDC are the most liquid and widely supported. DAI is popular for DeFi. BUSD and others have regulatory issues in some jurisdictions. Always research current status.

Can I earn interest on stablecoins?

Yes. You can earn yield through DeFi lending (Aave, Compound), liquidity provision, staking, and centralised platforms. Yields range from 3% to 15%+, but higher returns come with higher risk.

What causes stablecoins to depeg?

Depegging can be caused by loss of confidence in the issuer, insufficient reserves, market panic, regulatory action, or smart contract exploits. The Terra/UST collapse in 2022 is the most famous example.

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Useful Links

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UK Regulatory Framework

Overview of key UK regulations relevant to stablecoin trading:

  • Financial Services and Markets Act 2023 — Brought stablecoins used for payment into UK regulatory perimeter
  • Money Laundering Regulations 2017 — AML/KYC requirements for cryptoasset businesses
  • FCA Cryptoasset Registration — Crypto firms operating in the UK must register with the FCA
  • HMRC Cryptoassets Manual — Tax guidance for cryptoassets including stablecoins
  • MiCA Regulation (EU) — EU framework affecting stablecoin issuers, relevant for UK traders using EU platforms
  • Bank of England Stablecoin Framework — BoE's regulatory approach to systemic stablecoins

This is a summary only. Consult official sources for complete regulatory information.