In the world of cryptocurrency, stablecoins are designed to offer price stability, making them less volatile than other cryptos like Bitcoin. Globally, it is believed approximately $255 billion is invested in stablecoin (as of June 2025). But despite the name, stablecoins are not necessarily stable. Milford Credit Analyst Remy Morgan talks to Ryan Bridge about how stablecoins are used, where are they stored, and why they play such a vital role in the crypto market.

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Bridge talks Business: 4 November 2025
Episode Transcript

Ryan Bridge
Kia ora and welcome to Episode 55 of Bridge talks Business with Milford. Great to have you on the podcast. And I have to say, I love doing this because I get to learn just as much as you do from all the experts at Milford. But honestly, how many of these things can they throw at us? We’ve had cryptocurrency. We got Bitcoin and now we have Stablecoin. What in the world is Stablecoin? We’re going to find out today with Remy Morgan from Milford. But first here’s your top five biggest influencers addition. What five events have impacted global markets the most in 2025?

1. Tariffs. Investors initially underestimated Trump’s resolve on this, but their complacency was shattered in April with Liberation Day. Since then, investors are a lot more chill on the implementation, even though they are the largest tax hike on US consumers in decades.
2. AI of course. The massive ramp in spending this year has boosted US GDP and imports. Investors have also cheered every deal, every announcement with a relentless chase of higher technology stocks, large and small. This is an enduring theme, but the path and destination are far from certain, and history suggests we will see some hiccups along the way.
3. It’s got to be gold. Investors can see the governments aren’t that serious about fighting inflation, not as much as they used to be, and are seeking alternative stores of value. This has seen gold rally 54% this year, alongside other perceived stores of wealth like cryptocurrencies.
4. Banks. The global banking sector is well placed to be part of, and benefit from, an increase in financing for growth going forward. Somewhat under the radar, they have been some of the best performing stocks this year, particularly in Europe.
5. Bonds. Global bonds are on track to deliver their best return since 2020 this year, as central banks have cut interest rates and bond investors fret about weaker growth, whilst bond yields have offered reasonable return from coupon payments.

So today’s episode is about one of those stories you might have heard a little bit about, but not a lot about. But in the years ahead, we probably will hear a great deal about Stablecoins. And luckily we’ve got Remy Morgan, who’s a Credit Analyst at Milford, here to explain – basically the 101, the what is it, why, and do I invest? Remy joins me on the podcast. Just a reminder, this segment is informational only and should not be considered financial advice. Remy, welcome.

Remy Morgan
Great to be here Ryan.

Ryan Bridge
Now, usually I pretend to be a little bit smart, but today I’m not even going to try. I have no idea what a Stablecoin is, but you know everything about them. So, tell me what is it?

Remy Morgan
So, Stablecoin is a form of crypto or a digital currency. And as the name suggests, it’s designed to maintain a stable value. Now it maintains its stable value by being backed on a 1 to 1 basis by a pool of reserve assets. So commonly Stablecoin is pegged to the US dollar, so fiat currency, and it would be backed by a pool of assets on a 1 to 1 basis. Typically very high-quality, stable-value assets – either US dollar currency itself, or what we call high-quality liquid assets. So, short-dated US dollar treasuries or insured bank deposits. And because it’s backed on a 1 to 1 basis, that helps to keep its stable value.

Ryan Bridge
So one US dollar would equal one Stablecoin?

Remy Morgan
Correct.

Ryan Bridge
Why not just use the US dollar?

Remy Morgan
Yeah. So that’s a good question. Stablecoin’s main use case at the moment is within that crypto trading ecosystem. So Stablecoin is on the blockchain. It uses the blockchain technology. A lot of crypto trading which occurs on the blockchain uses stablecoin to facilitate trading in and out of different cryptocurrency.

Ryan Bridge
Can you not use regular dollars to buy in and out of crypto currencies?

Remy Morgan
You can. But as we know, within the payment ecosystem there are fees and transaction costs involved with using regular currency, and also the payment ecosystem has a lot of different players and a lot of different intermediaries, which can slow down the process. By using Stablecoin, which is on that blockchain technology, that offers near instantaneous settlement. So it’s much quicker, much faster and cheaper because it cuts out those intermediaries.

Ryan Bridge
Right, so it’s kind of like a currency. It’s a means of exchange, as opposed to something that you’re investing in to make money off of it. Does it grow? I mean, if it’s pegged to the dollar, obviously it will appreciate as the dollar does. But is it something you would buy like as an asset class and hold?

Remy Morgan
That’s a really good question. So it differs from Bitcoin in that sense. So Bitcoin, like you say, that is something that you can buy and it may appreciate or depreciate in value. It has its own value that is driven by supply and demand forces. Stablecoin doesn’t fluctuate on its own accord because, as you say, it’s only as valuable as the underlying asset to which it is pegged. So you wouldn’t necessarily make money by buying Stablecoin itself. That would be maybe something like Bitcoin, which can fluctuate up and down in value. Rather, Stablecoin would be the means to facilitate getting in or out of Bitcoin.

Ryan Bridge
Okay. So it’s like the keys to the crypto kingdom, kind of. It’s the easy way to do business there.

Remy Morgan
That’s correct. There are also some other use cases for Stablecoins. So, it is a store of value in its own sense. And that can be really helpful for countries that have a very volatile currency or very high inflation. People might want to park their money in Stablecoin instead.

Ryan Bridge
So, we mentioned the US dollar. What else does it often get pegged to?

Remy Morgan
Yes. So there are some Stablecoins that are pegged to other commodities like gold. There are also some big Stablecoin issuers that are pegged to crypto. So the Dai is a good example. And there’s also algorithmic Stablecoin, which uses an algorithm to match supply and demand to help maintain that stable value.

Ryan Bridge
Right. Okay. Is this something that if you’re an investor and you’ve got some money lying around, is this something you would consider investing in or something you need to hold? Or is it really only for people who are in that crypto world?

Remy Morgan
Yeah, that’s a good question. So Stablecoin, as we mentioned before, doesn’t appreciate or depreciate in its own sense. It is more a store of value. And I think the key thing to remember with Stablecoin as well, is that currently under the US regulations, so the GENIOUS Act, it’s not permitted to be yield-bearing. So unlike when you park your money in a bank deposit and you earn interest on that deposit, currently, in most cases, you can’t do that with Stablecoin. So you wouldn’t be earning any return on holding Stablecoin in itself.

Ryan Bridge
This is one of the first times I’ve heard about Stablecoin. Call me ignorant, but is it something that’s going to take off? You know, like Bitcoin came along and everyone was like on the internet about it and then it blew up. Are we going to hear a lot more about Stablecoin?

Remy Morgan
I absolutely think so. And that’s because the US has been very forward thinking, with regards to the crypto ecosystem and Stablecoin. They have been working behind the scenes to produce regulation that will enable wider use cases, regulate it, help provide some confidence in Stablecoin, but there are still quite limited use cases outside of that crypto ecosystem.
So where we could perhaps see it take off is in that payment space like we discussed. So cheaper, faster payments, instantaneous settlement, particularly across borders. And that could be really helpful for business-to-business payments where they’re moving large quantums of money. And that timing and that cost is really key to the bottom line. Another use case is in the day-to-day consumer-to-business payments.
Currently we use our Visa or our Mastercard at the store. There is potentially a case in the future where people may use a Stablecoin card, but right now there’s a really limited incentive for consumers to be in Stablecoin because they don’t get a discount for using Stablecoin at a store. We have to on-ramp and off-ramp it. So I need to use my fiat currency, my US dollar, to buy into Stablecoin. And then I typically have to off-ramp it back into a fiat currency. We don’t really have that widespread adoption on the chain yet, where we’re seeing the full end-to-end payment transaction in Stablecoin.

Ryan Bridge
Who are the trusted brands that you would go to to buy it?

Remy Morgan
Sure. So there’s currently two major players. We’ve got Tether, that’s USDT and Circle – USDC. They make up about 86% of all Stablecoin at present. And if we wanted to buy a Stablecoin from Tether, I would send my one USD to Tether, either directly or through an exchange or a broker. Tether would then mint my one Stablecoin, making sure that they hold one US dollar or US dollar equivalent, high-quality liquid assets. And then they would send that one Stablecoin back to my blockchain address. And that would be quite a similar process if I wanted to redeem my Stablecoin back to US dollar.

Ryan Bridge
And it’s all legal beagle – like if you buy one US dollar worth of Stablecoin, they have to have one US dollar on reserve.

Remy Morgan
So that is the premise of it. The GENIUS Act currently only applies to Circle, USDC, but Tether is working to have its own regulation. It falls outside of the US currently, which is why the GENIUS Act does not apply to it. But I think over time we will see more global regulation that becomes applicable more broadly to the various different Stablecoin issuers.

Ryan Bridge
Alright, Remy. So what do we need for Stablecoin to really take off?

Remy Morgan
So we need to see more broad-based regulation. As we spoke about before, we need to see some alignment between different jurisdictions and the regulation that they impose. We need to see confidence and trust in Stablecoin and that broad-based acceptance. We need it to integrate into the existing payment ecosystem to enable us to stay on the chain. We need to be able to go to a store, be able to use our Stablecoin card. The store accepts our Stablecoin and stays on that chain, because that on-ramp and off-ramp, as I said, is currently that main limitation.

Ryan Bridge
Great. Remy, the only thing about it is that you call it a coin, but you can’t touch it.

Remy Morgan
That’s correct, it’s a digital currency. And, you know, this is the way of the world. We are going to digital. And, you know, I can see Stablecoin being the way forward to transact in digital assets in the future.

Ryan Bridge
Remy lovely to have you on the podcast. Thanks for explaining.

Remy Morgan
Great to be here.

Ryan Bridge
And for being so patient with me as well.

Remy Morgan
Not a problem, Ryan. Great to be here. Thank you very much.

Ryan Bridge
That was Remy Morgan a Credit Analyst at Milford giving us some 101 on Stablecoins. Thanks so much for listening. Don’t forget you can like, follow, subscribe and share this podcast wherever you like to listen.

Until next week, don’t forget to invest in yourselves.

Or don’t forget, you can use your KiwiSaver to buy your first house as well. Until next week, don’t forget to invest in yourselves.

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