What is a Stablecoin?

What Is a Stablecoin, in plain terms

A stablecoin is a digital asset whose value is fixed to a reference currency and that can be transferred between individuals or companies over blockchain networks. Unlike other cryptocurrencies such as Bitcoin or Ether, whose prices fluctuate continuously, a payment stablecoin maintains a stable parity with the currency it represents: that could be the Argentine peso (ARGt), the Brazilian real (BRAt), the Colombian peso (COLt), the US dollar, or other currencies.

The most precise definition comes from the GENIUS Act, the first federal law in the United States governing payment stablecoins, signed in July 2025: a payment stablecoin is a digital asset redeemable at fixed value, used as a means of payment or settlement, issued by a supervised entity and backed by high-quality reserve assets such as cash, short-term sovereign securities, or insured deposits.

How the value stays stable

The mechanism is simpler than it sounds. For every stablecoin issued, the issuer holds backing assets in a proportion that meets or exceeds the total in circulation. Those assets can be cash balances, short-term sovereign securities, and regulated low-volatility liquid assets, denominated in the same currency as the token: in the case of ARGt, in Argentine pesos; in the case of BRAt, in Brazilian reals; in the case of COLt, in Colombian pesos. Reserves are reviewed regularly by registered accounting firms.

The result: if someone holds 1,000 ARGt (the Twin Finance S.A.S. stablecoin denominated in Argentine pesos) and wants to convert them back to pesos, they can do so at a fixed value, following the redemption procedure published by the issuer.

What a Stablecoin is not

It's worth clearing up some common misconceptions.

A stablecoin is not a speculative cryptocurrency: Bitcoin or Ether have market prices that fluctuate with supply and demand. A payment stablecoin has a fixed value. It doesn't go up or down. Its function is to move, not to appreciate.

A stablecoin is not an investment product: the GENIUS Act explicitly prohibits stablecoin issuers from paying interest or returns to token holders. A stablecoin is a payment and settlement instrument: the digital equivalent of cash, not an investment vehicle.

A stablecoin is not a security: the US Securities and Exchange Commission established that certain payment stablecoins do not constitute securities under existing legislation, and the GENIUS Act codifies that position into law. This significantly simplifies the regulatory framework applicable to issuers and integrators.

What Stablecoins are used for

Stablecoins have concrete and growing use cases in the corporate and financial world.

International and cross-border payments: a company operating in multiple countries can settle payments between subsidiaries or to suppliers in minutes, without going through correspondent banks or waiting several business days. Settlement is immediate and the transferred value is exactly what was agreed.

Remittances: a migrant worker sending money to their family can do so via stablecoins at a fraction of the cost of an international bank transfer or traditional services, with same-day crediting.

B2B payments in local currency: in markets where access to dollars is limited or costly, a stablecoin denominated in local currency (such as the Argentine peso, the Brazilian real, or the Colombian peso) allows companies to settle payments in the currency they operate in, with verifiable backing and without the exchange rate exposure that other solutions entail.

Institutional settlement: finance teams that need to move capital between countries in Latin America can use stablecoins as a local-currency settlement layer, with greater speed and traceability than a wire transfer.

What the GENIUS Act means for Latin America

The GENIUS Act does not apply directly in Argentina, Brazil, or Colombia. But its impact is already being felt across the global ecosystem, for concrete reasons.

First, it sets the de facto standard. The world's leading payment networks, exchanges, and investment banks operate under or in coordination with the US regulatory system. An issuer that complies with the GENIUS Act gains access to those markets and the credibility that compliance implies, which translates directly into the trust that users and companies in the region can place in them.

Second, it defines what stablecoins are and are not. The clarity that payment stablecoins are not securities, and that token holders have no entitlement to returns, is being observed by regulators in Europe, Asia, and Latin America as a reference for their own frameworks. The regulatory conversation in the region no longer starts from scratch: it starts from the GENIUS Act.

Third, no country in the region yet has an equivalent law, but the paths are diverging. Argentina closely follows the US standard and has one of the highest digital dollar adoption rates in the world. Brazil is moving decisively on its own terms: the Central Bank has an active framework for digital assets and is developing the digital real. Colombia and Mexico are watching from a greater distance, with general frameworks for virtual assets but no specific regulation for payment stablecoins.

For finance teams and companies operating in the region, working with issuers that already comply with the GENIUS Act standard offers the highest level of certainty available today, regardless of where their operations are based.

Why global financial Institutions are adopting stablecoins

Institutional adoption of stablecoins is not speculative. It reflects a concrete reality: settlement over blockchain networks is faster, cheaper, and more traceable than traditional interbank payment systems.

Mastercard acquired BVNK, a stablecoin infrastructure firm operating in over 130 countries. Nasdaq announced an alliance with Kraken to enable tokenized stocks with instant settlement. Intercontinental Exchange (ICE), which operates the New York Stock Exchange, invested in OKX and integrated access to traditional markets through onchain infrastructure.

These are not isolated experiments. They are infrastructure decisions made by actors that process trillions of dollars per year, and they point in a clear direction: global financial settlement is migrating toward programmable, transparent networks.

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Twin Stablecoins are digital payment instruments backed by reserve assets. They are not securities, investment products, or insured bank deposits. Token holders have no entitlement to any yield or return from reserve assets. This content does not constitute financial or legal advice.

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