When you think of cryptocurrencies, the one that probably comes to mind is bitcoin. It’s the best-known and by far the largest digital asset, and its wild moves in price make it a favourite of speculators and the financial press.

But among finance types looking at how cryptocurrencies might shake up the actual banking system, a less racy crypto asset has been getting a lot more attention lately: stablecoins.

US President Donald Trump this year gave stablecoins a shot in the arm with new regulations.Credit: Bloomberg

These assets aren’t as exciting as bitcoin, as the name “stablecoin” suggests. However, they are surging in popularity thanks partly to US President Donald Trump’s policies, and more importantly, they could be genuinely useful when it comes to moving money around.

Some argue this also makes them more of a real long-term threat to established banks – maybe even including Australia’s big four. More on that later.

It’s not just tech bros making these sorts of claims, either. Stablecoins have been getting more attention from the economic boffins at the International Monetary Fund and the Reserve Bank, too.

So, what’s all the fuss about?

Stablecoins are a type of privately issued digital asset that’s basically designed to mimic regular money. They’re intended to maintain their value and are typically pegged to a traditional government-issued “fiat” currency – mostly the US dollar. They’re backed by certain assets, such as government bonds or bank deposits, and the sector’s value has tripled since 2023 to $US260 billion ($393 billion).

Crucially, stablecoins can be moved around near instantly on a “digital ledger” – rather than having to go through the complicated plumbing of the banking........

© The Sydney Morning Herald