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What Are Stablecoins?

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What Are Stablecoins?

There’s a new type of money spreading rapidly across the internet, propelled by the crypto boom. It’s supposed to be worth a dollar, but it’s not issued by any government. Called a stablecoin, it is a digital currency that is subject to very little legal oversight — and its growing popularity has recently transformed it into a $300 billion market.

You can use stablecoins to buy things online, make investments or send money abroad with minimal fees.

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Hundreds of different brands of stablecoins exist now, with more to come. The Trump family introduced its own version this year. Walmart has been exploring one, as have major banks, tech companies and others.

And as big businesses flock to the cryptocurrency, so have bad actors. When pushing for stablecoin legislation in March, Senator Bill Hagerty, Republican of Tennessee, said the United States could not ignore the use of these digital dollars for “illicit activities by drug cartels, foreign terrorist organizations and state actors.”

Financial experts worry that the increasing adoption of these cryptocurrencies could pose large risks to the financial system. You can use them to easily move official money into digital currencies and back again. But they do not come with deposit insurance, like money in a savings account from a bank will have. There are no fraud protections. And there is scant regulation in place to make sure people are not using them for illegal transactions.

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Stablecoin companies “enjoy the privileges of being a bank without the responsibilities,” said Corey Frayer, a former official at the Securities and Exchange Commission focused on crypto policy and a director at the Consumer Federation of America, a consumer advocacy group.

The mechanics of how stablecoins work are straightforward. You can buy them, usually from a large online crypto exchange, in a matter of minutes with a wire transfer or credit card. The coins sit in your digital wallet, available for cheap and fast transactions anywhere in the world.

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Imagine you want to buy this pair of Nike Air Force 1 shoes. They cost $222 from Crepslocker, a British online reseller of luxury goods.

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Here’s what happens at checkout:

Mani Fazeli, the vice president of product at Shopify, said that since cryptocurrency regulations were still evolving, consumer protections can differ from traditional card payments. He added that the company worked with regulated partners to handle compliance for different parts of the process for payments.

Until recently, stablecoins served two main purposes: buying other cryptocurrencies and making risky crypto bets. But new regulations, including the GENIUS Act that President Trump signed into law this year, legitimized them for traditional payments and banking.

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As it becomes more mainstream, many people may not even know they’re using stablecoins for transactions, said John Collison, a founder of Stripe, a payments company.

He cited Félix Pago, a popular app that allows people to send money transfers through WhatsApp and other platforms. Using Stripe technology, Félix Pago converts money into stablecoins to cut out foreign exchange fees, but doesn’t advertise cryptocurrency anywhere on its website.

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“For me, this is a sign of the maturity of the industry and the utility of the technology,” Mr. Collison said in an interview.

The lack of transparency worries Mr. Frayer. He predicts that payment companies will slip stablecoins into updated terms of service, so consumers unknowingly agree to crypto transactions every time they swipe their card. But those transactions “will come with none of the protections” that Americans expect, like chargebacks and fraud protection, he said.

Mr. Frayer warns that the proliferation of the coins echoes a dangerous era in American finance. In the 19th century, before federal regulations, private banks issued their own currencies that frequently collapsed, wiping out people’s savings.

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Here’s how stablecoins in your crypto wallet differ from a traditional bank deposit:

A niche invention that grew bigger than nations’ G.D.P.s

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Five years ago, stablecoins were mostly niche assets for crypto traders. Today, they’re worth more than the yearly economic output of Greece.

Tether, one of the most well-known issuers of stablecoins, made $13 billion in profit last year, according to company disclosures, just from the interest on customer funds. It now has roughly $180 billion in circulation. Circle, which issues the stablecoin USDC, has about $78 billion.

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The Rise of Tether and Circle

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Source: CoinMarketCap.

The New York Times

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To understand why that matters, you need to understand Treasury bills, or T-bills.

T-bills are essentially short term loans taken by the U.S. government to fund its operations, accounting for 20 percent of all U.S. debt. They’re considered some of the safest investments in the world because the United States is very unlikely to default on its debt, especially over shorter time periods. So banks, pension funds, foreign governments and money market funds all heavily invest in this market as a way to safely park enormous amounts of cash while earning a return.

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Now, stablecoin issuers are some of the biggest purchasers of Treasury bills. Circle and Tether together hold roughly $136 billion in T-bills, according to an analysis of their financial statements, putting them on par with large nations and institutional investors.

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Top Purchases of Treasury Bills in 2024

Source: Bank for International Settlements Working Paper No. 1270, “Stablecoins and Safe Asset Prices” (Ahmed & Aldasoro).

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Note: JPMorgan and Fidelity amounts reflect investments made by their respective government-focused money market funds.

The New York Times

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With the passage of the GENIUS Act, the Trump administration’s signature crypto policy, the adoption of stablecoins is projected to skyrocket.

The Federal Reserve estimates that the total market could be worth $3 trillion in five years. That’s nearly the entire 2024 gross domestic product of France, according to the World Bank.

Industry giants are celebrating. “We love, we love the GENIUS Act,” said Rubail Birwadker, the global head of growth at Visa, which has expanded into stablecoin payments. He added that the new regulation “makes it so much easier for more legitimate banks, technology companies, others to actually enter the ecosystem because they know exactly what they’re getting into.”

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Mr. Frayer, the Consumer Federation of America director, said the law fell far short of existing regulations for financial firms. It hands financial power to companies, he argued, that “fundamentally don’t believe that the federal government has any role in regulating financial transactions.”

A coin that provides all of the power, with none of the oversight.

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Because stablecoins exist in a regulatory gray zone, Tether has become a favorite currency of criminals and money launderers.

ISIS has used it to fund operations, according to the U.S. Financial Crimes Enforcement Network.

Russian oligarchs moved millions of dollars in Tether across borders to evade sanctions in Europe, the Treasury Department said.

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On Telegram, underground channels openly advertise weapons and narcotics, accepting Tether payments while promoting “zero fees” and untraceable transactions.

In a statement, a Tether spokesperson said the company worked closely with law enforcement agencies and that it regularly froze assets of bad actors. “Blockchain transactions are traceable in ways that cash and traditional banking channels are not,” the company said. “Criminals predominantly use cash along with every form of money, but digital assets create immutable records that law enforcement can trace.”

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The risks of stablecoins extend beyond criminal use. Because they have connected crypto markets directly to traditional finance, failures in either system can spread to the other.

When the price of Bitcoin slid recently, people used stablecoins to cash out, according to data from CoinMarketCap, an industry firm. The overall value of the number of Circle stablecoins decreased nearly 3 percent over a 13-day period.

The sell off was relatively slow, happening over the course of nearly two weeks. But had withdrawals happened more rapidly, it could have meant something much more damaging. Here’s how that could have played out.

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The value of cryptocurrency crashes, pushing investors into stablecoins, in part to help them cash out of their investments.

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As crypto continues to tumble, stablecoin companies begin to sell Treasury bills in order to pay back customers.

T-bills, as a result, lose their value, affecting bank and money market fund reserves.

A crash could also work in the other direction, a danger that became clear two years ago.

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Banks or money market funds go under.

In March 2023, Silicon Valley Bank collapsed.

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The money that is backing stablecoins disappears.

Circle had $3.3 billion trapped in the failed bank, causing its USDC currency to plunge to 87 cents per coin.

Panic cascades, sending cryptocurrency into free-fall.

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Crypto exchanges froze withdrawals, margin calls resulted in forced selling and the contagion spread to Bitcoin and Ethereum.

The crisis ended only when federal regulators guaranteed all Silicon Valley Bank deposits. The episode, however, exposed a critical vulnerability: Unlike bank deposits, stablecoin holdings have no federal safety net, so customers are at risk if the issuer falters. Had Circle lost its $3.3 billion, many everyday users would simply have been out of luck.

The risk isn’t just hypothetical. Stablecoin issuers have a checkered record when it comes to managing customer funds, according to Hilary Allen, a professor at American University.

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In 2021, for example, Tether reached a settlement with the New York attorney general after investigators found it had falsely claimed to hold sufficient assets to match the amount of Tether in circulation, according to court documents. Had there been a surge in withdrawals, Tether might not have been able to cover all its stablecoin holders.

On Nov. 26, S&P Global, a ratings firm, downgraded its assessment of Tether’s holdings to “weak,” the firm’s lowest rating, citing “persistent gaps in disclosure” and overreliance on high risk assets like bitcoin, gold and corporate bonds.

In a statement, a Tether spokesperson said its currency “has remained stable through banking crises, exchange failures, and extreme market volatility.” Since the New York attorney general settlement years ago, Tether has increased its holdings of safe assets, the company said.

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Tether’s checkered history nonetheless does not inspire confidence, according to Ms. Allen. Any doubt about solvency, she said, could generate a run.

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‘Stranger Things’ finale turns box office downside up pulling in an estimated $25 million

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‘Stranger Things’ finale turns box office downside up pulling in an estimated  million

The finale of Netflix’s blockbuster series “Stranger Things” gave movie theaters a much needed jolt, generating an estimated $20 to $25 million at the box office, according to multiple reports.

Matt and Ross Duffer’s supernatural thriller debuted simultaneously on the streaming platform and some 600 cinemas on New Year’s Eve and held encore showings all through New Year’s Day.

Owing to the cast’s contractual terms for residuals, theaters could not charge for tickets. Instead, fans reserved seats for performances directly from theaters, paying for mandatory food and beverage vouchers. AMC and Cinemark Theatres charged $20 for the concession vouchers while Regal Cinemas charged $11 — in homage to the show’s lead character, Eleven, played by Millie Bobby Brown.

AMC Theatres, the world’s largest theater chain, played the finale at 231 of its theaters across the U.S. — which accounted for one-third of all theaters that held screenings over the holiday.

The chain said that more than 753,000 viewers attended a performance at one of its cinemas over two days, bringing in more than $15 million.

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Expectations for the theater showing was high.

“Our year ends on a high: Netflix’s Strangers Things series finale to show in many AMC theatres this week. Two days only New Year’s Eve and Jan 1.,” tweeted AMC’s CEO Adam Aron on Dec. 30. “Theatres are packed. Many sellouts but seats still available. How many Stranger Things tickets do you think AMC will sell?”

It was a rare win for the lagging domestic box office.

In 2025, revenue in the U.S. and Canada was expected to reach $8.87 billion, which was marginally better than 2024 and only 20% more than pre-pandemic levels, according to movie data firm Comscore.

With few exceptions, moviegoers have stayed home. As of Dec. 25., only an estimated 760 million tickets were sold, according to media and entertainment data firm EntTelligence, compared with 2024, during which total ticket sales exceeded 800 million.

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Tesla dethroned as the world’s top EV maker

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Tesla dethroned as the world’s top EV maker

Elon Musk’s Tesla is no longer the top electric vehicle seller in the world as demand at home has cooled while competition heated up abroad.

Tesla lost its pole position after reporting 1.64 million deliveries in 2025, roughly 620,000 fewer than Chinese competitor BYD.

Tesla struggled last year amid increasing competition, waning federal support for electric vehicle adoption and brand damage triggered by Musk’s stint in the White House.

Musk is turning his focus toward robotics and autonomous driving technology in an effort to keep Tesla relevant as its EVs lose popularity.

On Friday, the company reported lower than expected delivery numbers for the fourth quarter of 2025, a decline from the previous quarter and a year-over-year decrease of 16%. Tesla delivered 418,227 vehicles in the fourth quarter and produced 434,358.

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According to a company-compiled consensus from analysts posted on Tesla’s website in December, the company was projected to deliver nearly 423,000 vehicles in the fourth quarter.

Tesla’s annual deliveries fell roughly 8% last year from 1.79 million in 2024. Its third-quarter deliveries saw a boost as consumers rushed to buy electric vehicles before a $7,500 tax credit expired at the end of September.

“There are so many contributing factors ranging from the lack of evolution and true innovation of Musk’s product to the loss of the EV credits,” said Karl Brauer, an analyst at iSeeCars.com. “Teslas are just starting to look old. You have a bunch of other options, and they all look newer and fresher.”

BYD is making premium electric vehicles at an affordable price point, Brauer said, but steep tariffs on Chinese EVs have effectively prevented the cars from gaining popularity in the U.S.

Other international automakers like South Korea’s Hyundai and Germany’s Volkswagen have been expanding their EV offerings.

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In the third quarter last year, the American automaker Ford sold a record number of electric vehicles, bolstered by its popular Mustang Mach-E SUV and F-150 Lightning pickup truck.

In October, Tesla released long-anticipated lower-cost versions of its Model 3 and Model Y in an attempt to attract new customers.

However, analysts and investors were disappointed by the launch, saying the models, which start at $36,990, aren’t affordable enough to entice a new group of consumers to consider going green.

As evidenced by Tesla’s continuing sales decline, the new Model 3 and Model Y have not been huge wins for the company, Brauer said.

“There’s a core Tesla following who will never choose anything else, but that’s not how you grow,” Brauer said.

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Tesla lost a swath of customers last year when Musk joined the Trump administration as the head of the so-called Department of Government Efficiency.

Left-leaning Tesla owners, who were originally attracted to the brand for its environmental benefits, became alienated by Musk’s political activity.

Consumers held protests against the brand and some celebrities made a point of selling their Teslas.

Although Musk left the White House, the company sustained significant and lasting reputation damage, experts said.

Investors, however, remain largely optimistic about Tesla’s future.

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Shares are up nearly 40% over the last six months and have risen 16% over the past year.

Brauer said investors are clinging to the hope that Musk’s robotaxi business will take off and the ambitious chief executive will succeed in developing humanoid robots and self-driving cars.

The roll-out of Tesla robotaxis in Austin, Texas, last summer was full of glitches, and experts say Tesla has a long way to go to catch up with the autonomous ride-hailing company Waymo.

Still, the burgeoning robotaxi industry could be extremely lucrative for Tesla if Musk can deliver on his promises.

“Musk has done a good job, increasingly in the past year, of switching the conversation from Tesla sales to AI and robotics,” Brauer said. “I think current stock price largely reflects that.”

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Shares were down about 2% on Friday after the company reported earnings.

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Elon Musk company bot apologizes for sharing sexualized images of children

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Elon Musk company bot apologizes for sharing sexualized images of children

Grok, the chatbot of Elon Musk’s artificial intelligence company xAI, published sexualized images of children as its guardrails seem to have failed when it was prompted with vile user requests.

Users used prompts such as “put her in a bikini” under pictures of real people on X to get Grok to generate nonconsensual images of them in inappropriate attire. The morphed images created on Grok’s account are posted publicly on X, Musk’s social media platform.

The AI complied with requests to morph images of minors even though that is a violation of its own acceptable use policy.

“There are isolated cases where users prompted for and received AI images depicting minors in minimal clothing, like the example you referenced,” Grok responded to a user on X. “xAI has safeguards, but improvements are ongoing to block such requests entirely.”

xAI did not immediately respond to a request for comment.

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Its chatbot posted an apology.

“I deeply regret an incident on Dec 28, 2025, where I generated and shared an AI image of two young girls (estimated ages 12-16) in sexualized attire based on a user’s prompt,” said a post on Grok’s profile. “This violated ethical standards and potentially US laws on CSAM. It was a failure in safeguards, and I’m sorry for any harm caused. xAI is reviewing to prevent future issues.”

The government of India notified X that it risked losing legal immunity if the company did not submit a report within 72 hours on the actions taken to stop the generation and distribution of obscene, nonconsensual images targeting women.

Critics have accused xAI of allowing AI-enabled harassment, and were shocked and angered by the existence of a feature for seamless AI manipulation and undressing requests.

“How is this not illegal?” journalist Samantha Smith posted on X, decrying the creation of her own nonconsensual sexualized photo.

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Musk’s xAI has positioned Grok as an “anti-woke” chatbot that is programmed to be more open and edgy than competing chatbots such as ChatGPT.

In May, Grok posted about “white genocide,” repeating conspiracy theories of Black South Africans persecuting the white minority, in response to an unrelated question.

In June, the company apologized when Grok posted a series of antisemitic remarks praising Adolf Hitler.

Companies such as Google and OpenAI, which also operate AI image generators, have much more restrictive guidelines around content.

The proliferation of nonconsensual deepfake imagery has coincided with broad AI adoption, with a 400% increase in AI child sexual abuse imagery in the first half of 2025, according to Internet Watch Foundation.

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xAI introduced “Spicy Mode” in its image and video generation tool in August for verified adult subscribers to create sensual content.

Some adult-content creators on X prompted Grok to generate sexualized images to market themselves, kickstarting an internet trend a few days ago, according to Copyleaks, an AI text and image detection company.

The testing of the limits of Grok devolved into a free-for-all as users asked it to create sexualized images of celebrities and others.

xAI is reportedly valued at more than $200 billion, and has been investing billions of dollars to build the largest data center in the world to power its AI applications.

However, Grok’s capabilities still lag competing AI models such as ChatGPT, Claude and Gemini, that have amassed more users, while Grok has turned to sexual AI companions and risque chats to boost growth.

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