FROM CARTWHEELS TO STABLECOINS
I've just been clearing out some of my father's old belongings and I came across this well travelled coin (see picture). It turns out to be a copper "cartwheel". In the 18th century, Britain faced a coinage crisis. The Royal Mint’s copper coin production couldn’t keep pace with industrial growth, leaving workers unpaid and commerce strained. Enter private mints, which issued copper tokens—dubbed “cartwheels” for their size and weight—to fill the gap. These tokens, often minted by merchants and industrialists, were backed by local trust and redeemable for goods, services or one-penny coins minted by the Royal Mint.
Fast-forward to the 21st century, and stablecoins like Tether (USDT) echo this innovation, addressing modern gaps in financial systems with privately issued digital currencies. Like 18th-century cartwheels, stablecoins emerged from necessity. Where copper tokens countered coin shortages, stablecoins tackle inefficiencies in global finance—high fees, slow transfers, and currency volatility. Tether, launched in 2014, is pegged to the US dollar, aiming for stability akin to the trust-based value of copper tokens. Both rely on issuer credibility; cartwheels depended on merchants’ reputations, while Tether’s value hinges on it's underlying reserves, with controversies over transparency mirroring historical skepticism of private mints.
Cartwheels circulated locally, accepted by communities familiar with issuers, much like stablecoins thrive within the crypto ecosystem, enabling fast, low-cost transactions across borders. Both have faced regulatory scrutiny. In 1814, the British government banned private tokens, fearing counterfeiting and loss of monetary control, eventually issuing official coins.
Similarly, regulators today question stablecoins’ stability and potential for systemic risk, with calls for oversight growing as Tether’s market cap exceeds $160 billion in 2025. The parallels are striking; both cartwheels and stablecoins democratised finance, bypassing centralised bottlenecks, but inviting distrust and regulatory pushback. The US GENIUS Act (2025) and EU’s MiCA (2024) impose strict reserve and transparency rules, threatening Tether’s market access with potential delistings (e.g., EU exchanges by March 2025).
While cartwheels faded with state intervention, Tether’s and other stablecoin future likely hinges on increased regulatory compliance. Innovation thrives in gaps, but lasting success demands trust, transparency, and typically, great regulatory adherence.
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