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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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The tale of L.A.’s iconic hot sauce and how Ozempic is making it even hotter

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The tale of L.A.’s iconic hot sauce and how Ozempic is making it even hotter

For 55 years, the family behind Tapatío has refused to even write down the recipe for Los Angeles’ iconic hot sauce, passing its secret formula for success only from lip to ear in closed rooms.

The Saavedra family put the ingredients on paper for the first time earlier this year as they sold the beloved brand to backers who plan to make their salsa picante even bigger beyond California’s borders. It is a weight off the shoulders of Luis Saavedra, the founder’s son and one of the few people who knew the recipe.

“We didn’t want anyone to know what we were using,” he told The Times in an interview at Tapatío’s factory in Vernon. “That always scared my sisters, because what if something happens?”

Demand for hot sauces had taken off for unexpected reasons just as the Saavedras were looking to sell. The millions of people on Ozempic and other powerful weight-loss drugs often have cravings for more flavor. The values of some sauce companies have skyrocketed. Bachan’s, a Japanese barbecue sauce brand, was acquired in February for $400 million.

While the Dallas private investment firm that bought Tapatío, Highlander Partners, wouldn’t share the terms of the deal, the company’s new chairman, Jeff Partridge, said it hopes to capitalize on the growing appetite for more heat to splash on proteins.

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“Whether it’s GLP-1 or desire for proteins, Tapatío and hot sauces enhance that experience,” he said. “Consumers are increasingly seeking flavors.”

Red peppers drive Tapatío’s taste, though the company won’t share which exact peppers are used. The thin sauce uses garlic, salt and other spices for a tangy, peppery punch. It has a mild heat that doesn’t linger.

Luis Saavedra, right, former chief executive officer of Tapatío Foods and son of company founder Jose-Luis Saavedra, speaks with Eric Beatty, the current chief executive, at the company’s manufacturing facility on Wednesday.

(Genaro Molina / Los Angeles Times)

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The big acquisition is a long way from the brand’s birth in founder Jose-Luis Saavedra’s kitchen more than 50 years ago.

Saavedra, originally from Mexico City, long dreamed of making his way north. He landed in Chicago in his late 20s, working as a Spanish translator. He met his wife and moved to Southern California.

He worked at an aerospace parts manufacturer in Los Angeles. The homemade hot sauce he brought for lunch was a hit with co-workers who asked for more. When he was laid off in the late ’60s during an oil recession, he started selling bottles.

As sales rose, he rented a small space for production in Maywood and it officially became a business in 1971. The whole family pitched in. His son, Luis, remembers twisting on caps and attaching labels to bottles when he was 13.

Bottles are filled with Tapatio hot sauce.

Bottles are filled with Tapatío hot sauce before being labeled at the Tapatío manufacturing facility on Wednesday. The hot sauce company was recently acquired by Dallas-based private investment firm Highlander Partners.

(Genaro Molina / Los Angeles Times)

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Saavedra and his son would drive a van up and down Los Angeles, manually packing and unloading the product to local corner stores. Many of the first bottles were stocked in East Los Angeles stores.

About five years in, the company made enough for Saavedra to quit the two part-time jobs he had picked up to keep the business afloat. Operations remained in Maywood for 14 years before they expanded to a 7,000-square-foot building in Vernon.

In 1996, the company made its boldest bet, splurging on a 30,000-square-foot building.

In the same facility today, the strong aroma of spices tickles visitors’ noses. The precise portioning of the secret ingredients, matching the ratios of the founder’s original formula, happens in a room locked off from employees. The magic mix is then rapidly poured into a long line of empty bottles that march along a conveyor belt like soldiers.

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It’s the legacy of the founder, who refused to be deterred by naysayers or obstacles to growth, said Saavedra’s son.

“Let’s go around it,” the younger Saavedra said, quoting his father’s mantra in the face of problems. “Let’s go under. Let’s go above it.”

His father’s stubbornness paid off in court as the company was sued for its name. It was once called Cuervo — his wife’s original last name — and tequila giant Jose Cuervo came after it. Saavedra had already trademarked the name in California, so it got a big payout to give up the name.

Saavedra briefly entertained the name “Charro,” a reference to Mexican cowboys, before landing on Tapatío, a nickname used for people born in Guadalajara, Jalisco, where all three of his children were born. Its logo evolved into a beaming cowboy with bright blue eyes in a wide-brimmed hat.

The Tapatío name was also challenged. Del Monte Foods sued Saavedra in the ’80s, claiming the name was too similar to its brand “Patio.” Saavedra won that case.

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The founding father’s hardheadedness could also sometimes cause trouble.

The original Tapatio label, left, compared to the current lversion at Tapatio.

Luis Saavedra, son of company founder Jose-Luis Saavedra, shows the original Tapatío label, left, compared to the current version.

(Genaro Molina / Los Angeles Times)

The younger Saavedra battled with his father in the late ’90s about changing the brand’s label to help it stand out on crowded shelves. The old bottles were largely black and white and looked a little outdated. Eventually, the senior Saavedra gave in. Sales skyrocketed.

Today, Tapatío is shaken over meals around the globe, though its dominance is strongest in California. It has been used in collaborations with other companies to spike mashed potatoes, protein powder, pickles and ramen.

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Tacked to a wall at the Vernon factory is an old photo of the dozen people who were there to launch the brand’s new facility 30 years ago. Some of the employees still work there, including Jorge Cuervo, the production supervisor, and Fabian Diaz, who mans the forklift.

Diaz, who moves countless pallets of product, jokes he was born at the factory, having spent almost his entire adult life working for the company.

Under the new ownership, all 25 current employees were retained, and the firm has committed to hiring more.

“They’ve been doing this for a long time,” Luis Saavedra said. “They have a passion for it.”

The family began exploring options for a sale in late 2024, right after the founder, now 97, suffered a stroke.

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Jose-Luis Saavedra had remained closely involved in day-to-day operations despite his age, often spending from sun-up to sun-down at the factory.

As he took on all his father used to do as well as his own workload, the younger Saavedra was getting burnt out and started to worry that keeping the company family-owned could be hurting the brand.

“Work was really devouring me,” Luis Saavedra said. “It was a tough decision, very difficult. We cried together as a family, then we said, ‘In the long run, it’s better.’”

Luis Saavedra, left, former CEO of Tapatio.

“It was a tough decision, very difficult. We cried together as a family, then we said, ‘In the long run, it’s better,’” Luis Saavedra said of the decision to sell the company.

(Genaro Molina / Los Angeles Times)

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Once it let potential suitors know the company was in play, the offers poured in. The family considered offers from around 40 companies before choosing Highlander Partners.

In a few years, the company’s new leaders hope to use the growing demand for flavor triggered by weight-loss drugs to bring California’s top sauce to many more markets east of the Rockies, said Eric Beatty, the company’s current chief executive.

“We believe that we’ve got these sector tailwinds behind us,” Beatty said. “It’s going to be a really good story.”

Eric Beatty, current CEO of Tapatio.

Eric Beatty, current chief executive officer of Tapatío Foods LLC, stands next to boxes of the hot sauce that are ready for shipping at the Tapatío manufacturing facility on Wednesday.

(Genaro Molina / Los Angeles Times)

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New leadership has grand plans for the brand, hoping to build more facilities and add new products.

“We’ll always be a California company,” Beatty said. “This will always be the center of the Tapatío universe.”

Meanwhile, the Saavedra family still has a minority stake in the company and will continue to help manage it.

“They are the essence of the brand, and really understand the heartbeat of the brand,” said Partridge, Tapatío’s new chairman. “We certainly want to make sure that they always have a voice.”

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Video: How the Iran War Is Affecting Inflation

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Video: How the Iran War Is Affecting Inflation

new video loaded: How the Iran War Is Affecting Inflation

Ben Casselman, our chief economics correspondent, describes how the increase in prices as a result of the war in Iran is beginning to show up in the data, and what could come next.

By Ben Casselman, Nour Idriss, Stephanie Swart and Sutton Raphael

April 11, 2026

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Man charged with arson after setting fires inside Ontario Mills mall

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Man charged with arson after setting fires inside Ontario Mills mall

A man was arrested Friday morning after he set multiple fires inside stores at the Ontario Mills mall, officials said.

Ontario police said they responded to the mall at about 10:30 a.m. after callers reported that a man with a lighter and a backpack was intentionally setting fires.

Officers found the suspect, who they identified as 28-year-old Luis Javier Gallegos Jr. of Rancho Cucamonga.

The police said in a statement that Gallegos did not comply with their requests, and they used force to arrest him.

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Both Gallegos and an officer suffered non-life-threatening injuries during the arrest, the police said.

After being treated at a hospital, Gallegos was booked into the West Valley Detention Center and charged with felony arson, the police said.

Police said they are working to identify a motive for the crime and whether there is any connection to the April 7 arson at the Kimberly-Clark warehouse in Ontario.

Prosecutors say the inferno destroyed the 1.2 million square-foot warehouse and the paper products inside, resulting in $500 million in damages.

Chamel Abdulkarim, a Highland resident who worked at the warehouse, is facing both state and federal arson charges for setting the fire.

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Abdulkarim, 29, filmed himself setting fire to multiple pallets of paper goods, according to the U.S. attorney’s office for the Central District of California.

In the video, he says, “If you’re not going to pay us enough to [expletive] live or afford to live, at least pay us enough not to do this [expletive].”

Anyone with information about the fires Friday at Ontario Mills Mall is asked to contact the city’s police department at (909) 986-6711.

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