At a glance
- Stablecoins are digital currencies pegged to traditional money like the pound or dollar.
- They enable fast, cheap international payments and can be programmed for automated transactions.
- Global regulation is a patchwork, and their tax treatment remains uncertain for accountants.
- Accountants must advise clients on recording, reporting, and navigating complex stablecoin tax rules.
A digital coin that mimics the pound or the dollar might not sound revolutionary. But think about the last time a client sent funds overseas. The bank fees. The days of waiting. The absurdity of a global financial system that still observes weekends and public holidays. Suddenly, we have a clearer case for the digital cryptocurrency variant known as stablecoins. They are much more than a crypto novelty.
They are also gaining serious scale. A July 2025 McKinsey report noted that around US$250 billion in stablecoins have been issued, facilitating US$20 to $30 billion in daily payment transactions. To be fair, this is still a fraction of the trillions processed daily by traditional systems like SWIFT. Yet it represents a fast-growing slice of the financial pie – a slice that tastes of speed and efficiency.
What exactly are stablecoins? They are a variety of cryptocurrency that behaves in many ways like traditional money. Rather than gyrating wildly, bitcoin-style, their value should stay pegged to an underlying currency like the pound or the $A. A late-2024 report from Standard Chartered Bank and digital asset brokers Zodia Markets called stablecoins “the first killer app” of blockchain technology.
Drew Bradford, CEO of Catena Digital, calls them “programmable money.” In July 2025, his firm became the first non-bank in Australia permitted by ASIC to issue stablecoins under an Australian Financial Services Licence.
“They enable you to send funds internationally, directly and instantly,” Bradford explains. “Traditionally, if I want to send money to my son in the UK, I would contact NAB, who would send it to their correspondent bank, the Royal Bank of Scotland, who would then send it to Lloyds … That could take five days, and each of those banks takes a fee.”
A stablecoin pegged 1:1 to the Australian dollar, however, allows him to send the money directly. No middlemen. No waiting. Just a few seconds.
Beyond payments, stablecoins serve other functions. They can be used to park cash before investing elsewhere in the crypto space, or as a relatively safe port during a market storm.
Hence the growth projections now coming from financial markets. The Standard Chartered report authors estimated global stablecoin supply at about 1% of the US M2 money supply and of foreign exchange transactions. “As the sector becomes legitimised,” they wrote, “a move to 10% on each measure is feasible. “
Programmable money, real-world problems
The “programmable” part is where things get interesting for business. “Stablecoins contain smart contracts,” Bradford says. “That means you can use them with an if/then statement.”
This opens up new commercial possibilities. “I can say, ‘If this happens, you get the money’. That could be, ‘If you send me a digital asset, you get the money’. So, it means you can potentially also use the coins for digital escrow.” This automates payment on delivery, removing trust barriers in transactions.
“Stability, trust and transparency are not barriers to adoption … They’re prerequisites.”
Effie Dimitropoulos
Importantly, stablecoins typically remain stable when they are backed by audited reserves. If some other form of backing is applied, they can become highly unstable. The classic case is the “algorithmic stablecoin” method often used before 2022’s Terra Luna crash in 2022, which sent that token from $US118 to $US0.09.
Similarly, if there are factors that call into question the issuer’s ability to meet customer redemptions for the underlying currency, instability can result.
When fully backed, stablecoins can be similar to cash, with some extra benefits. Nevertheless, their suitability as a stable cash replacement remains in question. In its 2025 annual report, the Bank of International Settlements warns that stablecoins “perform badly” on key requirements for being treated as money. The global monetary authority suggests that “they may at best serve a subsidiary role”.
Compliance and traceability on the blockchain
Like their stability, stablecoins’ usefulness to criminals is often discussed. But the facts often diverge from the headlines. “Cash remains the most commonly used medium for illegal transactions,” says Effie Dimitropoulos, CEO of AUDD (Australian Digital Dollar). “Stablecoins, by contrast, operate on transparent, immutable ledgers where every transaction is traceable.”
This public ledger – the blockchain – appears a powerful deterrent to crime. “When Catena issues an Aussie dollar stablecoin, we can tell you exactly where that stablecoin is at any time and where it has been,” says Bradford. “Criminals are getting caught when they use money on blockchain because it can be traced, unlike a $50 bill.”
Responsible issuers are also embedding compliance into the technology itself. AUDD, for instance, works with AUSTRAC to meet Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws. It enforces transaction monitoring, spending caps, and multi-signature security features. Some proponents argue that the future of digital assets is not unregulated chaos; it is high-tech compliance.
Regulation: A global patchwork
Around the world, regulators are moving at different speeds. Europe, Japan, Singapore, and Hong Kong are leading the pack. The United States is catching up fast, spurred by US President Donald Trump’s enthusiasm for cryptocurrency. The US’s proposed GENIUS Act, for example, would mandate 100% backing with liquid assets and monthly public disclosure of reserves.
The UK and Australia, however, are lagging.
In the UK, HM Treasury has published draft legislation around a financial services regulatory regime for cryptocurrencies and other crypto assets. And the UK Financial Conduct Authority has published its own consultation paper around proposed rules for issuing stablecoins and safeguarding crypto assets. The FCA has confirmed it wants to treat stablecoins as money-like rather than as investment assets. But final rules are not expected until 2026, and critics warn UK legislative change is coming too slowly.
Australia, too, has yet to finalise a clear framework, Dimitropoulos says. In the meantime, issuers like AUDD are engaging with regulators to shape the rules, all while maintaining a 1:1 backing verified by third-party attestations. Bradford expects to see draft legislation in Australia before the end of 2025, with a vote likely by mid-2026.
The slow pace in both countries creates risk. “Some countries will bypass what we call normal banking and go straight to blockchain banking,” Bradford warns. Hundreds of millions of people are unbanked across Africa and Asia. For them, a smartphone and a stablecoin wallet could become their primary financial tool, leapfrogging traditional infrastructure.
Far from resisting oversight, most credible players are calling for it. “Stability, trust and transparency are not barriers to adoption,” Dimitropoulos insists. “They’re prerequisites.”
The accountant’s conundrum: asset or cash?
For accountants in the UK and Australia, the most immediate challenge is a fundamental one of classification. On the balance sheet, stablecoins are currently treated as digital assets, not cash. This subjects them to capital gains tax in Australia. And for financial institutions, it triggers a higher risk-weighted asset charge.
Mat Merlehan, manager of cryptocurrency accounting firm Tax On Chain, says policy change is a priority. “We are pushing a square peg through a round hole,” he says.
The uncertainty creates tax questions around processes such as :
- wrapping and unwrapping – that is, converting a token into a derivative for use in other applications
- bridging – moving tokens from one blockchain to another
- transfers – sending assets between an exchange and a private wallet.
“Depending on who interprets the law and how they interpret it, these could be seen as taxable events,” Merlehan notes. “We need a clear set of rules for this game.”
This ambiguity puts accountants on the front line. Members of the profession will increasingly advise clients on how to:
- record and reconcile stablecoin transactions
- monitor and report gains or losses
- understand wallet custody and ensure traceability for audit trails; and
- navigate capital gains tax events triggered by a growing list of crypto activities.
As stablecoins become embedded in SME operations, accountants’ guidance will be critical. “For SMEs, stablecoins could mean faster payments, lower costs and fewer banking hurdles,” says Dimitropoulos. “For accountants, they represent an opportunity to bring clients into the future of finance, with eyes wide open and compliance front of mind.”
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