yZAR and the state of stablecoins

First things first: what is a stablecoin, and how’s it different from other cryptocurrencies? Bloem set the scene by explaining how cryptocurrencies – like Bitcoin, for example – started out as a medium of exchange, but very quickly became a volatile asset. Suddenly, the idea of paying for a cup of coffee with a Bitcoin wallet became impractical. “The price [of Bitcoin specifically] would go up and down considerably throughout the day,” she said. “One moment you could buy your coffee for R2 and the next moment you’d be buying your coffee for R50.”

The solution was stablecoin, a stable-value digital asset that was pegged 1:1 to a fiat currency. “One rand equals one token, and we can transact with it because one rand will always be worth one rand,” said Bloem. “And that’s where the term ‘stablecoin’ comes from. Stable value, the price doesn’t go up and down, so I can buy my coffee for the right price.”

Regulating Cryptos and Stablecoins

That’s how it started… but – as happens with game-changing innovations – complications quickly arose. Chief among those was the question: if fiat currencies (like rands, dollars, euros, etc) aren’t yield-bearing assets, shouldn’t the same rule apply to digital currencies (like stablecoins)?

In the United States, the GENIUS Act (short for Guiding and Establishing National Innovation for US Stablecoins) was officially signed into law on 18 July 2025 by President Donald Trump, seeking to regulate stablecoins while also prohibiting issuers from offering yield to the investor. The GENIUS Act was introduced alongside the CLARITY Act, which aims to establish a comprehensive regulatory framework for digital assets.

The European Union, meanwhile, has introduced MiCA (Markets in Crypto-Assets Regulation) and DORA (Digital Operational Resilience Act) to regulate the space.

The CLARITY Act is expected to regulate the yield-bearing aspect of stablecoins, protecting deposit-taking institutions (like banks) while regulating asset managers (who are, in effect, taking charge of clients’ assets and paying a return thereon).

“Globally, people are having this fight,” said Bloem. “When is something a security, versus when is it not a security? That’s the fight that will happen in each country, with each central bank, with each regulator.”

All of this dispels the myth that the crypto and stablecoin communities are unregulated. “We’re all regulated at this stage,” said Bloem. “We have financial service provider licences. We have stepped into that regulatory space and have chosen to become trusted. The regulatory frameworks have been lacking, to a large extent, because technological innovation has moved so much quicker than the regulators. But regulators have also taken a wait-and-see approach: ‘Let’s see what works.’”

Ultimately, she said, the concept of tokenisation is not fundamentally different, from a risk perspective, to how a money market fund is constructed and operated in the existing regulatory space.

“What is the difference between a yield-bearing stablecoin and a money market fund paying interest, at the end of the day?” she said. “I have money in a deposit, I have some assets backing it, and I’m paying interest on it. Same construct. But the vehicle on which I transacted is now different. The vehicle – i.e. the token – is now being regulated.”

yZAR: The yield-bearing stablecoin

The concept of a yield-bearing digital currency is central to Mesh.trade’s new yZAR – a yield-bearing, ZAR-backed stablecoin.

yZAR came out of Mesh’s mZAR digital currency. “mZAR is our Rand-based payment stablecoin,” Bloem told the Magic Markets podcast hosts. “It doesn’t do anything other than making sure that you can transact in the best way possible – and it does that job beautifully in its simplicity.”

But Mesh users – investors and issuers alike – had started to ask questions. For investors, it was: “I have money sitting in my Mesh.trade account, but it’s not doing anything. It’s lazy. But I don’t know what to invest in just yet.” For issuers: “I’ve just raised R100 million in assets, but I’m not ready to use it in my business just yet. What do I do with it?”

“The answer is yZAR, which stands for yield-bearing Rand,” said Bloem. “It’s a wiser way of managing your money effectively. yZAR compounds daily, so if you take three days to transact with it, you’ll get interest for those three days. It’s not going to be wiped out, like it would be in your bank account. It also settles monthly, so on that monthly cycle, you would get a payment of yZAR back into your account that you can do other things with. We’ve integrated this into our entire Mesh.trade value proposition, giving our clients the ability to transact with it. So even when you’re waiting for your IPO to close, you’ll still earn interest through this asset.”

To invest in yZAR, register for Mesh.trade and view the asset overview