Stablecoin depeg: will the 1.00 euro peg hold?

A stablecoin is meant to be worth the same thing at all times: one euro, one dollar, no movement. A depeg is the moment when that stops being true: the market price of the token comes loose from the value it refers to. The most important number in all this is not in an exchange's order book, it is in your claim against the issuer. With an e-money token authorised in the EU, the issuer pays back par value, at any time and free of charge. That is set out in Article 49 of Regulation (EU) 2023/1114, which everyone calls MiCA. The exchange price and the redemption price are two different numbers at two different counters, and anyone who confuses them sells at a discount at the wrong moment.

On Sunday morning there is no sign of a depeg. Tether (USDT) stands at $0.9991, USD Coin (USDC) at $0.9998, DAI at $1.00 and Ethena's USDe at $0.9993. Four tokens, four different designs, all four practically on their mark. Quiet phases like this one are exactly when the construction is worth a look, because the differences between those four tokens only become visible once the market puts them to the test.

Depeg: the deviation between market price and reference value

The term is built from peg, for a pin or a tie, and the prefix de-. What is meant is a token's tie to a reference value, usually an official currency. MiCA defines an e-money token as "a crypto-asset that purports to maintain a stable value by referencing the value of one official currency". A depeg exists when the market price leaves that tie, downwards as in the familiar cases, or upwards, which is rarer and has the same cause: a mismatch between supply and demand that the redemption mechanism does not level out quickly enough.

There is no fixed threshold above which a deviation counts as a depeg. In practice, deviations below half a percent disappear into the noise of the trading venues; they arise from spreads, fees and thin order books at individual exchanges. The market speaks of a depeg once the deviation is large enough that arbitrage does not close it within minutes. At that point it is no longer about the price. At that point it is about the backing.

Four designs, four different breaking points

Stablecoin is a collective term, and it hides the fact that the four common designs can tip over in completely different ways.

Fiat-backed: cash and cash-like paper at the issuer

For every token there is money or a cash-like security held at the issuer. USDT and USDC belong here. The breaking point sits wherever the reserve sits: with the bank, with the quality of the securities, with the question of whether the issuer can get at the money fast enough in a crisis.

Overcollateralised: more collateral than tokens issued

Behind DAI sit deposited crypto-assets worth more than the tokens issued. The buffer absorbs price falls until the collateral drops so fast that automatic liquidation can no longer keep up. That is exactly what happened to DAI in March 2020, when realising collateral in a crashing market produced gaps.

Synthetic: hedging through the derivatives market

USDe holds crypto-assets and hedges them at the same time through futures contracts. The construction depends on that hedge working on the derivatives exchanges and staying affordable. If it tears, no bank balance carries the token.

Algorithmic: a mechanism instead of a reserve

Here there is no collateral but a mechanism that steers supply and demand through a second token. With TerraUSD (UST) that sister token was LUNA: anyone redeeming a UST below the target price received a dollar's worth of LUNA, for which new LUNA had to be created. That model delivered the industry's most expensive collapse in May 2022: once confidence tips, the mechanism amplifies the decline instead of braking it, the death spiral everyone has talked about since. MiCA leaves this design practically no room in the EU any more.

The lesson from that sequence is an uncomfortable one: the name tells you nothing about the risk. Only the design tells you something, and you find it in the whitepaper, not in the price chart.

At least 30 percent in bank accounts: what MiCA requires of the reserve

For e-money tokens authorised in the EU the reserve is not a promise but a legal obligation with figures attached. Article 54 of the regulation states: "At least 30 % of the funds received shall always be deposited in separate accounts in credit institutions." The remainder has to go into "secure, low-risk assets" that qualify as highly liquid financial instruments with minimal market, credit and concentration risk and are denominated in the same official currency the token refers to.

Those three requirements are the core of the protection, and they aim precisely at the cases that went wrong in the past. Separate accounts keep client money apart from the issuer's own assets. The currency rule prevents a euro token from being backed with dollar paper and wobbling with every move in the exchange rate. And the liquidity requirement is meant to ensure the issuer can sell the reserve without pushing the price down itself. One detail deserves attention: the 30 percent is a floor for bank balances, not a ceiling on risk. The larger part of the reserve may sit in securities, and how liquid that paper really is in a genuine crisis only shows up in a crisis.

Anyone wanting more detail will find the list of firms permitted to issue stablecoins in the EU, together with the relevant whitepapers, in the European register. How that register is built and what is missing from it is something we took apart in our overview of the MiCA register of stablecoin issuers. Which obligations a provider in Germany has to meet on top of that is set out on our page on MiCA licence duties for crypto firms.

Article 49: redemption at any time, at par value, free of charge

The regulation's strongest provision is not the one on the reserve but the one on the claim. Article 49 governs issuance and redeemability in four short sentences every holder should know. Paragraph 2: "Holders of e-money tokens shall have a claim against the issuer of those e-money tokens." Paragraph 4: "Upon request by the holder of an e-money token, the issuer shall redeem the monetary value of that e-money token to the holder, at any moment and at par value." Paragraph 6 closes the back door: "Without prejudice to Article 46, the redemption of e-money tokens shall not be subject to a fee."

A claim is a right to demand a specific performance from a specific debtor, here money to the amount of par value. In practice that means a price discount on an exchange has no bearing on what the issuer owes you in the case of an authorised euro token. In theory that is a guarantee; in practice it is a procedure. You need an account with the issuer, or a service provider that handles the redemption for you, and you need the redemption conditions that the issuer has to state prominently in the whitepaper under paragraph 5. Anyone who only starts looking for that route once the price has already moved is looking for it at the worst possible moment.

Article 50: why an authorised euro token may not pay interest

One provision takes many people by surprise: Article 50 prohibits interest on e-money tokens, and it does so twice over. Neither the issuer nor a crypto-asset service provider may grant it. Interest here means "any remuneration or other benefit related to the length of time during which a holder of an e-money token holds that e-money token". The legislator names the reason in recital 68 itself: the aim is to reduce the risk of e-money tokens being used as a store of value.

For you that is a test with a high recognition value. An offer promising you a running yield on a euro or dollar stablecoin either does not run through an e-money token authorised in the EU, or it runs through a construction in which the return comes from something other than holding the token, from lending, from derivatives positions or from a bonus scheme. What that hangs on in an individual case is something we worked through for card offers in our piece on the MiCA interest ban and the seven percent on stablecoins.

Exchange price against redemption price: two counters, two numbers

The most common error of thought around depegs is the assumption that there is one price. There are at least two. One forms in an exchange's order book out of supply and demand and can differ from venue to venue. The other is the par value an authorised issuer pays on request. In quiet times the two numbers sit so close together that nobody notices the difference. In hectic times they pull apart, and then that difference decides real money.

An incident from October 2025 demonstrated it. During a wave of liquidations the USDe price slid well below a dollar on one single large exchange, while the token stayed near its mark at other venues. Ethena countered that it was not accurate to speak of a depeg when a single venue steps out of line; the exchange itself traced the slump to its own price determination and reimbursed affected customers a sum in the hundreds of millions. How to judge the episode is disputed to this day. The mechanism behind it is not: if a price from a single venue is used as the basis for liquidations, a local spike transfers losses onto positions whose collateral was in fact stable.

That has a consequence with little to do with the legal position and a great deal to do with practice: if you post stablecoins as collateral for a leveraged position, your liquidation price hangs on your exchange's price source, not on the token's backing. Which price source your provider uses is in its trading terms.

Four triggers that genuinely break a peg

The cases of recent years can be traced back to four causes, and they rarely appear on their own.

The reserve is worse than assumed. If backing is missing, or if it sits in paper that can only be sold at a discount, the issuer cannot meet every redemption at par value. The market prices that in before it is proven.

The bank holding the reserve fails. In March 2023 USD Coin came under pressure because part of the reserve sat at Silicon Valley Bank and the bank's closure left the availability of that part open for a weekend. The token fell below a dollar and recovered once it was clear the deposits would stay accessible. The backing had never disappeared, only become unreachable, and that is precisely the point of separating it into dedicated accounts.

Liquidity tears, not the backing. In thin order books a large market order shifts the price without anything having changed about the reserve. Spikes like that are often over within minutes. They become expensive for whoever sells or is liquidated inside that window.

Confidence tips and sets off a run. Every stablecoin is built on one assumption: that nobody ever wants to redeem all at once. With TerraUSD in May 2022, redemptions met a mechanism that created new supply with every step. The construction makes the difference to the USDC case, not the panic: a fiat-backed token has a floor plate, an algorithmic one has a system of equations.

How a peg comes back: arbitrage, redemption, supply reduction

A depeg heals through three mechanisms, which bite differently well in each design. The first is arbitrage: if the market price falls below the target, somebody buys the token cheaply and redeems it with the issuer at par value. The difference is their profit, and every such purchase lifts the price. That mechanism requires redemption to be open, quick and free of charge, which is exactly why Article 49 is more than consumer protection: it keeps the repair route open.

The second mechanism is supply reduction. Every redemption takes tokens out of circulation and shrinks the supply until supply and demand fit together again. With a fiat-backed token that route ends at a floor plate of bank balances and securities. With an algorithmic token it ends nowhere: there, redemption created new supply in a different token, and the further the price fell, the more had to be created.

The third mechanism is the slowest and the most important: confidence. USD Coin did not stand at a dollar again in March 2023 because somebody burned tokens, but because it had become certain that the deposits at the closed bank would stay accessible. The reserve had never changed, only the expectation of it. That shows what matters when judging a stablecoin. What is decisive is who pays if it comes to it and how quickly they can get at the money, not the price chart of the past hour.

Whitepaper, authorisation, redemption conditions: the three places with answers

To assess a stablecoin you do not need a chart but three documents. First the crypto-asset whitepaper: under MiCA it has to exist for every e-money token, be submitted to the authority and describe the features and risks. Second the issuer's authorisation: in the EU only credit institutions and electronic money institutions may issue e-money tokens, and who may do so is in the European register. Third the redemption conditions, which under Article 49(5) have to appear prominently in the whitepaper: who redeems, by which route, within what period.

Added to that is a point many overlook: Article 55 requires a recovery and redemption plan from every issuer. It has to be notified to the competent authority within six months of the public offering or of admission to trading. Behind it stands the question of what an orderly wind-down looks like if the issuer itself gets into difficulty. For tokens without EU authorisation that plan does not exist, neither as an obligation nor as a document.

Two current examples from our own coverage show how differently that works out in practice: with the launch of Open USD with no entry in the EU register and with Polkadot's dotUSD with no issuer, the same question arises in each case: against whom does your claim run if the price falls? An overview of the tokens tradable in Germany is in our stablecoin comparison.

Tax in Germany: every swap into a stablecoin is a sale

Here sits the trap that has nothing to do with the stability of the price. Anyone swapping Bitcoin into a stablecoin disposes of their Bitcoin under German tax law. What governs it is section 23 of the Income Tax Act: gains from private disposals stay tax free if more than a year lies between acquisition and sale. Inside that period they are taxed at the personal rate as soon as the year's total gain exceeds the threshold. The swap into a stablecoin is not a parking manoeuvre but a disposal, and a holding period of its own begins for the stablecoin received.

More hangs on that than it first appears. Anyone fleeing into a euro token when prices fall and swapping back later has triggered two transactions of tax relevance and lost the holding period on the original position. Anyone using a stablecoin to pay also triggers a disposal; what that looks like with card payments is in our piece on why every payment with a crypto card is a sale. How the holding period for Bitcoin runs in an individual case depends on the purchase date of each separate position. Receipts and dates are easier to manage with a tool from our comparison of crypto tax software than with a spreadsheet.

Our view on stability in the EU

From the newsroom's perspective, MiCA shifts the risk rather than abolishing it. The evidence sits in the regulation itself: the claim under Article 49(2), repayment at par value under paragraph 4, the absence of fees under paragraph 6 and the minimum of 30 percent in separate bank accounts under Article 54 are hard, enforceable obligations that no algorithmic token of 2022 had. At the same time a remainder is left that no law governs: the market can push any token briefly below its mark, and if that price serves as the basis for liquidations at your provider, you carry the damage even though the backing stands. Against that, the deviations measured this morning sit below 0.1 percent for all four tokens checked, so the constructions hold in normal operation. For abnormal operation the rule still applies: a total loss is possible with any crypto-asset, and an issuer's authorisation is not deposit insurance.

Stablecoin depeg: your claim is against the issuer

A stablecoin's peg is not a law of nature but a construction made of reserve, redemption and confidence. In the EU a claim stands behind par value; at a trading venue there is only an order book. Three steps make that difference usable for your portfolio:

1. Establish the design and the authorisation. Look in your stablecoin's whitepaper to see which of the four designs sits behind it and who the issuer is. If you trade through a platform with EU authorisation, you will find both details together with the redemption conditions; a selection of authorised houses is in the comparison of regulated crypto exchanges.
2. Read up on your exchange's price source. If you post stablecoins as collateral, search the trading terms for which price counts for liquidations. Which tokens are available in Germany at all is shown by the stablecoin comparison.
3. Record your holding periods. Note the date for every swap into a stablecoin, because it ends one holding period and begins another. A tool from the tax software comparison takes over the bookkeeping.

(As of October 18, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)