Definition ∞ Centralized stablecoins are digital currencies designed to maintain a stable value relative to a fiat currency, typically the US dollar, and are issued by a central entity. These assets are backed by reserves of traditional assets, such as fiat currency, government bonds, or commercial paper, held and managed by a specific company. The issuer is responsible for maintaining the peg and processing redemptions, providing a predictable digital asset for transactions and trading. Their value stability contrasts with the volatility of other cryptocurrencies.
Context ∞ Centralized stablecoins face ongoing regulatory scrutiny regarding the transparency and auditability of their reserves, a frequent topic in financial news. Debates center on their role in global finance, potential systemic risks, and the need for clear oversight. Their continued growth impacts liquidity across the digital asset ecosystem.
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