What Are Stablecoins

Speakers: Bruce Hosler,  Jason Hosler, & Jon Gay

[Music Playing]

Jon Gay (00:05):

Welcome back to Protecting and Preserving Wealth, I’m Jon Jag Gay. I’m joined as always by Bruce Hosler and Jason Hosler of Hosler Wealth Management. Good to be with both of you guys today.

Bruce Hosler (00:12):

Jon, good to be with you.

Jason Hosler (00:14):

Good morning, Jon.

Jon Gay (00:15):

So, we’re talking about stablecoin today, and I don’t want to scare anybody because this is a new topic to me too. We’re going to explain what stablecoin is, why it’s so important, and how the GENIUS Act plays into all of this. This is part one of a two-part series. So, Bruce, where do you want to start?

Bruce Hosler (00:31):

Well, let’s start with stablecoins are not the same as other cryptocurrencies. People think that they’re all the same, and there’s a big difference between them. And stablecoins only have become now viable because the government of the United States has passed the GENIUS Act.

Now, that stands for Guiding and Establishing National Innovation for US stablecoins. Imagine that, they came up with GENIUS as a name out of all that. But the regulatory framework is very important because the industry, the crypto industry and the stablecoin industry could not move forward because there were no regulations.

It’s not that the government had regulations — they didn’t regulate it, and it was like the Wild West. And so, everybody was afraid that if they went some way and they spent some money and they went down a path, they were going to get caught and be in trouble. So, now, that the GENIUS Act was passed in July of this year, it will become effective in 2027, but it mandates that third party audits have to be performed on the reserves that are held for stablecoin.

So, Jason, talk about a stablecoin in this whole reserve thing of how stablecoins equal US dollars that are digitized into the blockchain.

Jason Hosler (01:56):

Stablecoins are backed by dollars and US treasuries because the idea behind them is to have something that you can interact with on the various blockchains that are out there that equals $1. This is important in all kinds of different applications, specifically that the rest of the world still uses dollars as reserve currencies. They price all these cryptocurrencies in dollars, and the stablecoin being backed by dollars or treasuries gives it its value.

So, when we had a stablecoin in the past that collapsed, they didn’t have the backing to be able to say that, “Hey, we have enough dollars or treasuries to equal $1 for one stablecoin so that it had an even peg.” This is kind of like how money markets function. They buy various things to back their fund and also produce a yield. The stablecoins are basically money market funds that transact on blockchain.

Jon Gay (03:07):

So, that’s kind of the difference here is, I don’t want to say monopoly money because that’s not fair to cryptocurrency, but there’s more of a foundation. There’s something concrete almost that it’s linked to in the case of stablecoin. Do I have that right?

Bruce Hosler (03:20):

Well, it’s a big difference actually, Jon, and you do have it right. So, for every crypto coin out there, there’s huge volatility on what the price is on every day. On a stablecoin, it’s stable because it’s locked in on the value of the dollar or the US treasury of a dollar, and so it’s stable in value. So the value’s not going to go up and down, but the beauty is, it’s on the blockchain.

So, now, we went from paper to digital, and one of the things that’s beautiful about that is you can hold stablecoins and no bank is required to settle them, and they settle instantly, and you can earn potentially more interest than maybe the banks are paying, and you can hold them in your bank account, and they can be transacted internationally as well because they have the value of the dollar.

Jon Gay (04:16):

I don’t want to say it takes out the middleman of the bank, because that’s not right, but you might be dealing with less fees, you might have more opportunity to directly move your money around.

Bruce Hosler (04:27):

Jason, talk about the international aspects of this.

Jason Hosler (04:30):

You do. I mean, so on the various crypto exchanges, of course, you could buy the existing stablecoins that are out there. You can send them then to a wallet that you manage yourself. You can send them from exchanges directly to others or to companies that are accepting them. So, it’s 24/7. If your bank’s not open, you still have access to the technology that provides you.

It’s all running on these blockchain rails and the speed, I mean almost instant settlement. You have extremely low cost on a number of blockchains where right now, a lot of people pay $15, $20, $25 to send a wire, maybe even more internationally, where for less than a penny, you can do a similar transaction on the blockchain that has the funds instantly there.

Jon Gay (05:26):

If only Marty McFly, sending money by Western Union, in Back To The Future could see us now.

Bruce Hosler (05:32):

Absolutely, that’s the case. And these stablecoins are smarter, they’re faster. The banks potentially, if they’re not paying a high enough interest rate, they’re going to get eviscerated on their deposits because if people can hold a stablecoin and is paying 3% or 4% versus their bank paying a half a percent, this is a potential change that is coming to us and it’s coming very quickly. And you don’t have to have your bank to settle these transactions. Because they’re on the blockchain, they can just be settled out in the internet, and transactions can take place.

Jon Gay (06:13):

I want to pause for a second here, Bruce, because you’ve mentioned blockchain. I just want to be clear on this. The blockchain is a digital ledger, that is one ledger, that can be accessed from different parts of the internet or different parts of the world. It’s essentially a digital ledger that’s consistent across the board. It doesn’t have to be updated in two places. It can be updated once consistently. Do I have that understanding correctly?

Bruce Hosler (06:34):

Yeah, there’s one other part to it. It’s a dispersed ledger, so anybody can go look at the transaction and verify it, and know that it’s true. And that’s why it’s very important because everybody trusts that because once that ledger’s been written, it can’t be changed, and so people can verify the transaction, and its visual out there for people to see. And that’s very good.

Just one point is that Visa has started and is currently using some stablecoin linked credit cards.

Jon Gay (7:07):

How does that work?

Bruce Hosler (7:09):

This change, folks, is coming very fast. And the way that it works is the stablecoins that are out there and available. You can have a credit card that would charge against your stablecoins, and because they’re held equal to the dollar, it’s like you’re spending dollars, but you’re spending stablecoins instead.

Jon Gay (07:32):

Alright, so you mentioned Visa, Bruce. In prep for the show, you sent me this stat, which blew my mind. And as your producer, I had to do my due diligence and verify this after you sent it to me because I couldn’t believe when I saw it.

But more payments have moved through stablecoins than through Visa and MasterCard combined, so far this year, as we record on October 9th of 2025. I looked in like three places on the internet because I couldn’t believe this was true, but as usual, Bruce, you were right.

Bruce Hosler (08:01):

It is amazing that this is being adopted so quickly, and that’s why it’s so important that we’re bringing this to our listeners. This change is coming at lightning speed, and people are going to get caught off if they’re not ready to adopt and to understand this, and we’re fearful of what we don’t know or understand.

So, we’re hoping that our podcast is bringing people up to speed on something that they may want to go study some more and learn about. And certainly, that statistic was amazing when I saw it, and that’s why I wanted to include it.

Jason, talk about the global demand that we’re seeing with what’s going on with stablecoin.

Jason Hosler (08:41):

Obviously with the dollar being the reserve currency of the world, there’s a lot of demand, especially in places that might be experiencing higher inflation, political instability, economic risks, et cetera, and so on, they want to have dollars. Dollars hold their value and are accepted widely across the world. However, it can be difficult in many countries to actually get access to those dollars.

Now, anybody with an internet connection pretty much can get access to the dollars. So, there’s a huge amount of demand for dollars, and now that they’re offered in the wrapper of a stablecoin, that’s much easier to access than maybe the traditional dollar for various players in the world, that puts demand.

On top of that, you have the mass adoption of the blockchain technology across the board from governments to corporations like Visa, creating the stablecoin linked card. They’re using the blockchain technology in their own internal functions.

So, as you have everybody onboarding to the digital technology that’s been created via blockchain, you’re going to have a lot of demand for the dollars to actually pass through those rails.

Jon Gay (10:02):

If I could make a self-serving analogy here, it almost sounds like stablecoins are doing for bank accounts, what podcasting did to radio. It’s sort of a democratization of it.

Bruce Hosler (10:11):

It totally is. And let me explain why this adoption is going to be so quick. It’s because of the GENIUS Act, and there’s a couple of parts of the GENIUS Act that I want to tell our listeners about. Number one, it mandates third party audits for the reserves.

So, every one of these companies that put together a stablecoin, they’re going to be audited, and they have to hold reserves of dollars or US treasuries for all of the stablecoin they have out there. So, that gives confidence that the stablecoin is going to have its value, that there’s a dollar backing up every one of those.

It provides consumer protection by prioritizing the stablecoin holder. And if there’s an insolvency of the stablecoin, well, that holder gets priority, and it solidifies the dollars role as the global reserve currency by promoting responsible innovation and demand of US dollars for stablecoins around the world. That regulation is what’s going to allow the rapid adoption of this technology for payments.

Jon Gay (11:21):

And I think that’s so key that you just mentioned that, Bruce, there’s accountability here. This isn’t the Wild West that we saw when cryptocurrency, for example, just started, and a lot of volatility as you mentioned earlier.

Bruce Hosler (11:32):

It was unregulated. There were no rules. It was the Wild West, and nobody could count on anything. This is totally different.

Jon Gay (11:40):

And this is going to be a very significant thing going forward. We’re going to talk in part two of our series about some of the practical applications of stablecoin and how it’s going to enter our daily lives from here. So, we hope you’ll back for part two of our series coming up soon.

Bruce, Jason, if our folks listening want to get in touch with you at Hosler Wealth Management about stablecoin or anything related to their personal finances, how do they best find you?

Bruce Hosler (12:04):

Well, certainly, they can reach us at the website, hoslerwm.com, we have a link on there. They can click for an appointment. And Jason, if they want to call you, where do they call?

Jason Hosler (12:13):

In Prescott give us a call at (928)-778-7666.

Jon Gay (12:19):

Alright, thank you both. We’ll talk to you again in a couple of weeks.

Bruce Hosler (12:21):

Thanks, Jon.

[Music Playing]

Disclosure (18:45):

Investment advisory services are offered through Mutual Advisors, LLC DBA Hosler Wealth Management, a SEC registered investment adviser. Securities are offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Advisors, LLC and Mutual Securities, Inc. (collectively “Mutual Group”) are affiliated companies. Forward-looking commentary should not be misconstrued as investment or financial advice. The advisor associated with this podcast is not monitored for comments and any comments should be given directly to the office at the contact information specified.

Any tax advice contained in this communication, including any attachments, is not intended or written to be used and cannot be used for the purpose of 1) avoiding federal or state tax penalties,  2) promoting marketing or recommending to another party any transaction or matter addressed herein, and 3) Tax preparation and accounting services are offered independently through Hosler Wealth Management Tax Services. Any tax advice provided by tax professionals under Hosler Wealth Management Tax Services is separate and unrelated to any advisory or security services offered through Mutual Group. The accuracy, completeness, and timeliness of the information contained in this podcast cannot be guaranteed. Mutual Group does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation. Accordingly, Hosler Wealth Management does not warranty, guarantee or make any representations or assume any liability with regard to financial results based on the use of the information in this podcast.