Over recent years, a new form of digital money has begun to carve out an increasingly prominent role in New Zealand’s crypto and investment landscape.

This is the stablecoin: a digital token typically linked to a traditional currency such as the US dollar.

Unlike more volatile cryptocurrencies such as Bitcoin, stablecoins are generally used less for speculation and more as a way to move and hold value – hence their name. They’ve gradually become more popular for trading digital assets, making everyday business payments and sending money overseas.

For regulators, however, they have posed an interesting challenge.

While designed to behave like money, stablecoins are typically issued by private entities and operate within…