What Is a Stablecoin? USDT and Swiss Crypto Explained
A clear guide to stablecoins and USDT — what they are, how they hold their value, what backs them, the risks, and where they sit in Swiss regulation.
Most cryptocurrencies are known for moving in price, sometimes sharply. Stablecoins are the deliberate exception: they are designed to hold a steady value, usually pegged to a traditional currency like the US dollar. USDT, also called Tether, is the largest and most widely used.
This guide explains what a stablecoin is, how USDT works, what is meant to back it, the risks worth understanding, and where stablecoins fit into Swiss regulation, which is becoming more important, not less.
What is a stablecoin?
A stablecoin is a cryptocurrency designed to keep a stable value by tracking an external reference, most commonly a fiat currency such as the US dollar, where the aim is that one coin is always worth about one dollar.
The appeal is straightforward. Stablecoins let you hold value on a blockchain and move it quickly, without the day-to-day price swings of assets like Bitcoin or Ether. They act as a bridge between traditional money and crypto: a way to stay “in” crypto without being exposed to its volatility at that moment.
A stablecoin is a different kind of crypto
It helps to see how this differs from a cryptocurrency like Bitcoin. As we explain in how Bitcoin works, Bitcoin has no central issuer and its price floats freely on the market. A stablecoin is the opposite by design: it usually has an issuer, and its value is anchored to something external rather than left to float.
So a stablecoin isn’t trying to be a high-growth investment. Its whole purpose is to not move, to be a steady unit you can price things in, move between platforms, or hold while you decide what to do next.
How USDT (Tether) works
USDT is a stablecoin issued by Tether, designed to stay close to one US dollar. It exists across several blockchains, which is part of why it’s so widely used for moving value between platforms and traders.
The intended mechanism is backing: the issuer holds reserves, cash and cash-equivalent assets, meant to correspond to the USDT in circulation, so each token can, in principle, be redeemed for its dollar value. In practice, the quality and transparency of those reserves is exactly what users and regulators scrutinise, which is why “what backs a stablecoin” is the central question for any of them.
What stablecoins are used for
Stablecoins have become one of the most-used parts of crypto, for a few practical reasons. They’re used to move value quickly between exchanges and wallets, to hold a steady position without cashing out to a bank, and as the main unit of account across much of the market.
They are also heavily used in decentralised finance, where a stable unit is essential for lending, trading, and other on-chain activity. That utility is real, but it doesn’t remove the risks, which are different from those of an ordinary cryptocurrency.
The risks worth understanding
A stablecoin is only as reliable as the system behind its peg, so the risks are specific. The main one is the peg itself: a stablecoin can “de-peg” and trade below its target value if confidence falls or reserves are doubted. Backing and transparency matter, if the reserves behind a coin are unclear or insufficient, that’s a real risk, not a technicality. There is also issuer and counterparty risk: you are, in effect, relying on the issuer to honour redemption and manage reserves responsibly.
The takeaway isn’t that stablecoins are bad, they’re widely used for good reasons, but that “stable” describes the design goal, not a guarantee. Treat a stablecoin as a claim on an issuer, and judge it on the strength and transparency of what backs it.
Stablecoins and Swiss regulation
Stablecoins are a major focus of regulators, including in Switzerland. As our guide to Swiss crypto regulation in 2026 explains, the Federal Council’s reform proposals specifically address stablecoin issuance, with obligations around anti-money-laundering and the safeguarding of reserves attached to a new licence category.
For users, the practical point is that holding or trading stablecoins on a regulated platform happens within the same framework as the rest of your activity: identity verification through KYC, and supervision such as VQF SRO membership in Switzerland. Regulation doesn’t change what a stablecoin is, but it does shape how responsibly it is offered and handled.
How to hold USDT
Like any cryptoasset, USDT isn’t stored in a wallet itself, your crypto wallet holds the keys that control it. USDT exists on several blockchains, so one practical point matters: when you send USDT, the network you use has to match on both ends, or funds can be lost.
On Eti-Tech you can buy, sell, and swap USDT in CHF and hold it in your own self-custodial wallet alongside your other assets. Eti-Tech handles the network details of each order; keeping the wallet secure stays your responsibility.
What to remember
A stablecoin is crypto designed to hold a steady value, usually pegged to a currency like the US dollar, and USDT is the largest example. It’s useful for moving and holding value without volatility, but “stable” is a design goal that depends on real backing and a trustworthy issuer, not a guarantee.
Judge a stablecoin by what backs it and how transparently it’s run, and prefer a provider that is open about how it is supervised. You can see how Eti-Tech is set up and supervised on our Registration page.
FAQ
- What is a stablecoin?
- A stablecoin is a cryptocurrency designed to hold a steady value by tracking an external reference, usually a fiat currency such as the US dollar. The aim is that one coin stays worth about one dollar.
- What is USDT?
- USDT, also called Tether, is the largest stablecoin. It is issued by Tether and designed to stay close to one US dollar, and it exists across several blockchains.
- Is a stablecoin a safe investment?
- A stablecoin is designed to hold value, not to grow, so it isn’t an investment for returns. It still carries risks, chiefly that it can lose its peg, and that you rely on the issuer and its reserves.
- What backs USDT?
- Tether states that USDT is backed by reserves of cash and cash-equivalent assets corresponding to the tokens in circulation. The transparency and quality of stablecoin reserves is a key thing for users and regulators to scrutinise.
- Are stablecoins regulated in Switzerland?
- Stablecoins are a focus of Swiss reform proposals, including specific obligations for issuers around anti-money-laundering and reserves. Trading them on a regulated platform falls within the same KYC and supervisory framework as other crypto activity.
Related reading
Crypto-assets, including stablecoins, involve significant risk. A stablecoin can lose its peg and you may lose part or all of your funds. Stablecoins carry issuer, reserve, and counterparty risk. This article is for informational purposes only and does not constitute investment advice, legal advice, an offer, or a solicitation. Eti-Tech AG is a VQF SRO member and a Swiss VASP.
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