A stablecoin is a coin pegged to another underlying asset, usually fiat currencies such as the US Dollar, but can also include commodities like gold, and even cryptocurrencies. The asset to which the stablecoin is pegged does not need to match the asset it refers to. Depending on how their values are stabilised, stablecoins can be grouped into 3 different categories; - algorithmic stablecoins, like Frax - crypto-backed stablecoins, like DAI - fiat-backed stablecoins, like USD Coin
In the EU, stablecoins have been redefined by the Market in Crypto-assets Regulation (MiCA). Read about MiCA's new definition in Stablecoins Are No More: MiCA’s EMTs and ARTs Explained.