The History and Future of Stablecoins

Stablecoins Unblocked Conference 2025

There’s nothing inherently dodgy about stablecoins. But there is something inherently dodgy about banking, which is why countries build elaborate regulatory regimes to protect deposits — Brendan Greely, Financial Times (13th February 2022).

When I stood before the audience at Stablecoins Unblocked a few weeks ago, I wanted to make clear that we are in the middle of the transition from one kind of economy to another (very different) kind of economy, one which will require a different kind of money.

It needs money that can support the growth of industries in, and economic activities of, the new economy and one of the most important ways it can do this is by using the technologies of the new economy itself to deliver the money.

As the government has not stepped in to provide this new money so instead technology companies have simply begun to produce their own money. Private money is beginning to circulate. Using these new technologies, enterprises have started to produce “tokens” that function as money and the market has responded by using them to facilitate economic activity.

Tokens have gone from being a limited solution to a specific problem to key elements of the infrastructure in the wider economy and, as a consequence, the government is now looking at them and wondering how to regulate them, how to manage them and what to do with them in the future.

Welcome to England in 1787.

Tokens Past

England was the birthplace of the industrial revolution and so it was the first economy to see the need for a new kind of money for retail payments. At the dawn of the industrial revolution, the circulating medium of exchange was of neither the quality nor the quantity needed to support the expanding economy. 

As the currency shortage threatened to derail industrial progress, the new technologists of the day, the new-fangled manufacturers in the newly created factories, began to mint custom-made coins, originally called “tradesman’s tokens” around 1787.

These tokens served as the nation’s most popular currency for wages and retail sales until 1821, when the Crown outlawed all moneys except its own, a story told with exceptional clarity in economist George Selgin’s wonderful book “Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage 1775-1821” which not only examines the crucial role of private coinage in fuelling the first Industrial Revolution but also sheds light on contemporary private-sector alternatives to government-issued money.

Lessons from Stablecoin History

You may have noticed that the coins and banknotes in your pocket today are provided by the government, not by private players.

So what changed? And, more importantly, what can we learn from the change that will give us insight into the future of stablecoins?

I’d like to suggest four key areas where the lessons of the Industrial Revolution have some value to the pioneers of the post-industrial Revolution: these are technology, acceptance, finance and regulation.

TECHNOLOGY

Matthew Boulton’s high-quality private token coins were so successful and visually superior to official currency that in 1797 the government gave him a contract—backed by legislation—to mint legal copper coins, effectively outsourcing currency production to a private entrepreneur using new technology to curb the proliferation of unofficial alternatives.

ACCEPTANCE

Locally issued tokens and paper money, created in response to market demand rather than central authority, were efficient but prone to trust issues. These problems were gradually resolved as state-backed legal tender from the Royal Mint provided standardized, reliable coinage.

REGULATION

Ultimately, the government reasserted its monopoly on coinage. In 1816 , Parliament passed laws outlawing the circulation and production of private tokens. The motivation was partly ideological—reasserting state sovereignty over the currency—and partly practical, as the authorities became better able and more willing to supply coinage in sufficient quality and quantity using the new technology. In 1821 the government outlawed the tokens completely.

FINANCE

Finally, there is the issue of finance. By centralizing coin production, the government also kept for itself the “seigniorage” (the profit arising from the difference between a coin’s face value and the cost of production). Private mints eroded this source of revenue. The reassertion of monopoly was, therefore, also a fiscal decision.

In summary then, the production and use of these private tokens spread rapidly and soon many different issuers, including Big Tech (that is, factories, mines and manufacturers), produced several thousand different designs and types of token. Hundreds of entities became token issuers, a business that pretty much ended in 1797, when the British government responded by officially producing the penny and two pence coins to supply adequate small change while commercial banks grew to provide business-to-business payments.

In 2024, when the Stripe CEO Patrick Collison labelled stablecoins “room-temperature superconductors” for financial services (after paying $1 billion for Bridge), he was not being hyperbolic and when Stripe went on to buy Privy (which had some 75 million stablecoin wallets out there) in 2025 that sealed the view of stablecoins as mainstream.

Globally, stablecoins are on a tear and in almost all cases the cash and assets are the US dollar and dollar securities. The two largest stablecoins out there right now are Tether and the USD Coin from Circle which account for some $240 billion in circulation. This is not much in the $36 trillion US Treasury market, but the growth has certainly focused the US Treasury’s attention. 

Why? Well, I agree with Marc Rubenstein’s analysis on this: when I bought my first stablecoin, it was in order to play around in “crypto”. But it is now clear that stablecoins are decoupling from cryptocurrency and their adoption is driven by

“practical applications rather than speculation“.

It seems that Stablecoin transactions, broadly speaking, support real world business.