By Bhairav Patel, Chief Technology Officer, Teybridge Capital Europe.
The term “stablecoin” is being used a lot at the moment and not just by crypto enthusiasts. The Bank of England has been talking about them, the US passed the GENIUS Act to regulate them, and the in the EU a single licensing regime is now fully enforced across all 27 member states. If you haven’t heard of them then don’t worry, we are launching a series of articles where we explain stablecoins, how we’re thinking of using them here at Teybridge and what all of this means for your business.
What Is a Stablecoin, Really?
Ever been to Disneyland? Ever buy Disney Dollars? Well, stablecoins are a lot like that.
Instead of exchanging your real dollar for a Disney Dollar you’ll go to a stablecoin provider, and you exchange your dollar (or Euro, Singaporean Dollar, Brazilian Real – the list is growing) for a token that sits on the blockchain.
What is the blockchain I hear you ask? Well that will be the subject for a later post but for now you can think of it as a big electronic ledger where transactions such as you swapping a real dollar for a dollar token is recorded.
That token you now hold represents a real dollar and you can trade it, spend it, send it to someone just like you would a normal dollar bill and if you no longer want that digital token, you can swap it back into hard currency (what the finance people called “fiat” currency”).
What we’ve just described is a fiat currency token and those are the most common ones in use, if you dive deeper into this you can find commodity backed stablecoins that, for example, are pegged to the price of gold, crypto backed stablecoins where you are issued a stablecoin based on the collateral you post in crypto and even algorithmic stablecoins where the value can fluctuate (so they’re not so stable) and these are the most complex and ones you’ll most likely not come across unless you have advanced knowledge in this space.
As you can see, this can get complicated quite quickly so for this introductory article we’ll keep it simple…
How Is a Stablecoin Different From Bitcoin?
In short, they are totally different and this is where most of the confusion starts, so let’s clear it up properly. Bitcoin has become its own “currency”, and it was built to be scarce, not stable.
Its value moves up and down, sometimes sharply, because it isn’t related to anything. A stablecoin has some sort of collateral backing it – either real money, a commodity like gold or something else of value. For Bitcoin, the value is inherent and the price is what people i.e the market, wants it to be. That volatility is part of the design for Bitcoin, but it makes it a poor fit for everyday business transactions. Nobody wants to invoice a client in an asset that might be worth 10% less by the time it clears.
A stablecoin is built to hold a steady, predictable value, which is exactly what you need if you’re using it to move money rather than speculate with it.
Where Did Stablecoin Come From, and Who’s Behind It?
Stablecoins are an invention and in 2014 the first to market with their stablecoin were Dan Larimer and Charles Hoskinson who created BitUSD which was a stablecoin backed by crypto. This was back in 2014 but unfortunately BitUSD was not meant to last and the token crashed in 2018.
Also in 2014 Tether (USDT) was launched by a company called Tether Limited. It was built to give crypto traders a steady asset they could hold between trades, without needing to cash out into a traditional bank account. They built their stablecoin as one that is backed by hard currency and history has now proclaimed them as the current winners as they are the main stablecoin provider with a current circulating supply of around 183 Billion Dollars!!
Fast forward to 2026 and there are many, many stablecoins in circulation with Tether’s USDT and Circle’s USDC the two largest. Recently, a consortium of major payment companies and banks, including household names like Stripe, Visa and Mastercard, launched their own jointly-owned stablecoin. There are sterling and euro versions too, though they’re currently much smaller than their dollar counterparts.
Where a stablecoin differs from Bitcoin is accountability. Bitcoin has no single issuer by design; it’s created and maintained by a global network of independent participants, with nobody personally responsible for its value. A stablecoin is different. Every stablecoin has a specific, identifiable company or group standing behind it, holding the reserves and responsible for honouring redemptions.
Can anyone start their own? In principle, yes, and for years that’s exactly what happened, with very little oversight. That’s changing quickly. Regulators in the UK, the EU and the US have now put licensing rules in place, meaning that launching and running a stablecoin properly requires formal authorisation, strict reserve requirements and ongoing supervision. It’s becoming a regulated financial activity, not a free-for-all.
Why Is Everyone Talking About It Right Now?
Because the infrastructure and the rules are both catching up at speed. In the US, a clear licensing law for stablecoin issuers passed in mid-2025, giving the market real legal footing for the first time. In the UK, the Financial Conduct Authority and the Bank of England have just finished writing their own rulebook. In the EU, a single licensing regime is now fully enforced across all 27 member states.
It isn’t just regulators moving, either. When a group of over 140 major companies, including some of the biggest names in payments and banking such as Stripe, back a shared stablecoin standard, that’s a signal about where the infrastructure of money is heading, not a passing trend.
Who’s Using It First, and How Does It Actually Work Across Borders?
The earliest serious use cases are showing up wherever traditional payment rails are slowest and most expensive: cross-border payments, international trade, and remittances. Here’s what that looks like in practice.
Say you run a homeware business in Manchester, and you’re paying a furniture supplier in Singapore. The traditional route looks like this: your bank converts your pounds to US dollars, then routes the payment through a chain of correspondent banks before it finally reaches your supplier in Singapore dollars. That typically takes several business days, and every bank in the chain takes a small cut along the way, on top of the exchange rate margin.
With a stablecoin, the same payment could work like this: you convert your pounds into a US dollar stablecoin through a regulated provider, send it directly to your supplier’s digital wallet, and it arrives in minutes rather than days. Your supplier, or their bank, then converts it into Singapore dollars. Fewer intermediaries, less waiting, and typically lower total cost. Singapore is a genuinely good example here, because its regulator, the Monetary Authority of Singapore, has one of the clearest and most established stablecoin frameworks in the world, which is exactly why it’s become a hub for this kind of business activity.
It’s worth being upfront, though, that this isn’t equally straightforward everywhere. Regulation varies sharply by country. Some markets have only just given digital assets legal recognition and still restrict the use of fiat-backed stablecoins like USDT or USDC specifically, even as they build out their own crypto frameworks. Others, like Singapore, Hong Kong and the UAE, already have clear rules that make this kind of payment genuinely workable today. And to be clear, this isn’t limited to a handful of specific countries by design. A stablecoin payment doesn’t care whether it’s moving between London and New York, or between Dublin and Singapore, because it travels over the internet rather than through a network of correspondent banks tied to particular trade corridors. What varies by region isn’t the technology, but the local rules around who’s allowed to use it, and how easily it can be converted into local currency at the other end. That picture is changing quickly as more countries finalise their own frameworks.
The Honest Pros and Cons of Stablecoin
Is this the future? It certainly seems that way however, Stablecoins do have their pros and cons.
The upside: faster settlement, lower transaction costs, and the potential to unlock liquidity for businesses that traditional banking rails have historically underserved.
The downside: the market is still young. Most stablecoins in circulation are US dollar-denominated, with sterling and euro versions remaining a tiny fraction of the global total, which matters if you’re a UK or Irish business thinking in your own currency. Regulation, while catching up quickly, is still being finalised in several major markets. And not every stablecoin is created equal; the strength and transparency of the reserves behind it is everything.
How Do Stablecoin Issuers Actually Make Money?
Most issuers earn a return on the reserves they hold. The cash and safe assets backing every token in circulation are typically invested in low-risk instruments like short-term government debt, and the issuer keeps the yield. This is a simple model but only works, and only stays trustworthy, if those reserves genuinely exist and are properly managed.
That being said, issuers such as Tether have grown so big that they are now making money from other sectors and using their profits to invest in Tether Power, Tether Data, Tether Finance, Tether Edu and Tether Evo.
Stablecoin and DeFi: What’s the Connection?
You’ll often hear stablecoin described as “the cash of DeFi,” short for decentralised finance, a term for financial services built to run without a traditional bank or broker sitting in the middle. DeFi needs a stable, predictable unit of value to function as a proper financial system rather than a speculative market, and that’s the role stablecoin plays inside it.
You don’t need to understand the whole of DeFi to understand stablecoin, but it’s worth knowing the two are closely linked, because much of what’s being built with stablecoin today borrows ideas DeFi got there first.
The Bottom Line
A stablecoin is a digital token designed to hold a steady value, backed by real reserves, moving over the internet rather than through the traditional banking chain. It isn’t one single product owned by one company; it’s a growing category with several major players, increasingly regulated, and increasingly taken seriously by the banks and payment giants who once kept their distance from it. For businesses that move money across borders, that combination of speed, lower cost and genuine reach is exactly why it’s worth understanding now rather than later.
You might be wondering why an invoice finance company is the one writing all this. Fair question, and it’s the one we answer next.
Read next: “Why Stablecoin, and Why Teybridge Cares.”
Frequently Asked Questions
Is there only one stablecoin?
No. There are many different stablecoins, issued by different companies and, more recently, by consortiums of major banks and payment providers. Tether (USDT) and Circle (USDC) are currently the largest.
Who created the first stablecoin?
BitUSD and Tether Limited both launched in 2014, but Tether is widely regarded as the first stablecoin to see real, widespread use.
Can anyone create a stablecoin?
In principle, yes, and for years there was very little oversight. That’s changing fast: the UK, EU and US have all introduced licensing and reserve requirements, meaning stablecoins now need to be properly authorised and regulated to operate legitimately.
Is a stablecoin the same as Bitcoin?
No. Bitcoin’s value moves freely and can be volatile, while a stablecoin is designed to hold a steady value, usually pegged to a currency like the US dollar, the pound or the euro.
Can a stablecoin be sent to any country, including in Asia?
Technically, yes, since a stablecoin payment travels over the internet rather than through a network of correspondent banks. In practice, local rules vary significantly. Some countries, including several in Asia, have only recently recognised digital assets and still restrict the use of fiat-backed stablecoins specifically, while others, such as Singapore, Hong Kong and the UAE, already have clear frameworks that make this straightforward.
Is stablecoin safe to use for business payments?
It depends heavily on the reserves and regulation behind the specific stablecoin being used. We cover the risks, including volatility, custody and fraud, in detail in a dedicated article on our site.
