Definition ∞ A Centralized Stablecoin is a digital asset designed to maintain a stable value relative to a fiat currency or other asset, with its issuance and reserve management overseen by a single entity. In contrast to decentralized stablecoins, its stability depends on the issuer holding equivalent reserves in traditional financial institutions. This central control facilitates easier redemption and regulatory oversight, yet it introduces counterparty risk.
Context ∞ The debate surrounding centralized stablecoins primarily concerns their transparency, auditability, and potential for censorship. Regulators are actively working to establish frameworks for these assets, with a focus on reserve attestations and operational standards. Future developments include increased scrutiny of reserve holdings and potential integration into traditional financial systems under stringent oversight measures.
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