Stablecoin Types: Public-Chain vs Private-Chain
The media often reduces stablecoins to a single concept, but they are more complex than that. There are three types of stablecoins: public-chain stablecoins, private-chain stablecoins, and tokenized deposits.
The public-chain stablecoin is the most well-known type in the crypto world. It's a fiat-collateralized token that is minted on a blockchain for every dollar held in a bank account or short-term U.S. Treasury bill. USDT and USDC dominate this market, with a total stablecoin market cap of over $300 billion by 2026.
The private-chain stablecoin, on the other hand, is preferred by Wall Street banks. They mint dollar tokens on their own internal ledgers, which only approved clients can access. JPMorgan's JPM Coin is an example of this type, moving billions of dollars a day for corporate clients through its system.
The third type, tokenized deposits, are not actually stablecoins but rather stored-value liabilities under state money-transmitter law. They include balances in PayPal or Venmo apps and Chase bank accounts, which are insured by the FDIC up to $250,000.