The Private Law of Stablecoins

Stablecoins have emerged as a critical component of the cryptocurrency ecosystem, serving as a bridge between traditional fiat currency and digital assets. With a market capitalization exceeding $150 billion, stablecoins facilitate trillions of dollars in annual transaction volume. Despite this explosive growth and systemic importance, the private law framework governing stablecoins remains largely undeveloped. This Article provides the first comprehensive analysis of how private law doctrines apply to stablecoins and their users. We examine three fundamental questions that determine the rights of stablecoin holders: What is the legal nature of a stablecoin? What property rights do holders have in the assets backing the stablecoin? And what happens to stablecoin holders when an issuer becomes insolvent? Our analysis reveals significant gaps and ambiguities in existing law that leave stablecoin holders exposed to substantial risks. We demonstrate that stablecoins occupy an uncertain position between different legal categories—they share characteristics of money, securities, commodities, and general intangibles—yet fit neatly into none of these categories. This categorization problem has profound implications for property rights, secured transactions, and bankruptcy outcomes. The Article examines the terms of service of major stablecoin issuers and shows how these private ordering mechanisms attempt to allocate risks and rights. However, we reveal that issuer disclosures are often inadequate or misleading, and that many critical issues remain unaddressed. We also analyze how different regulatory approaches would affect the private law framework for stablecoins. Ultimately, we propose a comprehensive private law framework that would protect stablecoin holders while preserving the innovation and efficiency benefits of these digital payment instruments.