Dollar-Pegged Token

Definition ∞ A dollar-pegged token is a type of stablecoin whose value is designed to remain consistently equivalent to the United States dollar. These tokens typically maintain their peg through reserves of fiat currency, other cryptocurrencies, or algorithmic mechanisms. They offer the stability of the dollar combined with the transferability and efficiency of blockchain technology. Such tokens are widely used for trading, lending, and payments in the digital asset ecosystem.
Context ∞ Dollar-pegged tokens, often referred to as USD stablecoins, are a critical component of the digital asset market, providing liquidity and a stable medium of exchange. Regulatory scrutiny regarding the backing and transparency of these reserves is a significant ongoing discussion, particularly concerning consumer protection and financial stability. News frequently reports on new regulations or audits aimed at ensuring the integrity and solvency of stablecoin issuers.