Stablecoins are cryptocurrencies that are pegged to a commodity such as gold or a fiat currency such as the U.S. dollar. They have attracted a lot of attention lately.
There are growing indications that stablecoins will be regulated in the U.S. and other jurisdictions. Expectations are that stablecoins will become the first class of cryptocurrencies to be subject to American regulations.
Given that many stablecoins are pegged to the value of the U.S. dollar, lawmakers and regulators worry that they could threaten the financial stability of the whole market.
Skeptics see regulation as an effort to stunt the rise of stablecoins as the U.S. Federal Reserve lays the groundwork for a digital dollar.
As all this plays out in the background, the use of stablecoins has soared this year as they gain more mainstream acceptance. Here are three stablecoins to buy if you’re betting on digitized dollars.
Stablecoins to Buy: Binance (BNB-USD)
Binance is actually the top cryptocurrency exchange in the U.S. However, the platform has developed its own stablecoin known as “Binance Coin” that is pegged at a value of 1:1 against the U.S. dollar.
Most important of all, BNB is compatible with the Ethereum (CCC:ETH-USD) platform, helping to make it one of the most reliable and consistent stablecoins. Users praise Binance Coin for its speed of transaction and also for the ability to use it across various types of commerce.
BNB recently got a big vote of confidence when the New York State of Financial Services approved its use in some limited transactions.
Users also like the fact that they aren’t charged any fees for employing or cashing out Binance Coin. Binance Coin is the preferred stablecoin for people who use the Binance exchange for transactions of different cryptocurrency assets.
Being tied to a crypto exchange gives Binance Coin an advantage in terms of its adoption and use. Binance Coin currently has a price of around $438.
USD Coin (USDC)
Just as Binance Coin is the official stablecoin of the Binance cryptocurrency exchange, USD Coin is the official stablecoin for rival crypto trading platform Coinbase (NASDAQ:COIN). Also, like Binance Coin, USDC is tied directly to the U.S. dollar.
Fans of USD Coin like that the stablecoin has been developed as an Ethereum-based digital token, making it ideal for decentralized finance (DeFi) applications.
USD Coin is one of the most widely used stablecoins around the world right now having secured licenses to operate in multiple countries.
Created in 2017, USDC is today one of the most widely held stablecoins with a market capitalization of $7.5 billion based on its current price of $1.
USD Coin is currently the second-largest stable coin after rival Tether (CCC:USDT-USD). Being widely available on the Coinbase cryptocurrency platform has helped USD Coin to grow in popularity.
Its practical use in the world of decentralized finance also gives USD Coin an edge over other stablecoins as DeFi is increasingly where cryptocurrencies are being used and have the greatest impact.
Digix Gold (DGX)
Digix Gold is what’s known as a “commodity-backed stablecoin.” Rather than be pegged to the U.S. dollar, DGX is pegged against the price of physical gold.
The Digix Distributed Autonomous Organization stores gold reserves and fixes each Digix Gold against one ounce of gold. Currently, the price of Digix Gold sits at right around $50.
For people who subscribe to the notion that cryptocurrencies are a digital commodity and hedge against inflation, Digix Gold would be an appealing investment vehicle.
Digital tokens are used to retain the identification of the gold bar against which a particular DGX coin is pegged. The token known as the “Proof of Asset” is administered through a smart contract involved in the creation of the Digix Gold token.
Any holder of Digix Gold can cash out the stablecoin for real physical gold bars according to the specified value. There are currently about 200 million Digix Gold tokens available. However, it is not accessible in markets such as China or Japan because of legal issues.
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Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
