The race for stablecoins in Asia: Between growth and surveillance

The global expansion of stablecoins is accelerating, pushing Asian countries to adapt their regulations. Authorities in the region are seeking to find a balance between the growth of tokens backed by banks or national currencies, and that of stablecoins pegged to the US dollar. In Japan, Singapore and Hong Kong, policies are evolving to define the role of stablecoins in the economy and clarify their integration with traditional financial systems.

Regulatory initiatives and trends across Asia

The development of stablecoins in Asia illustrates the search for a balance between private innovation and control of capital flows. A consortium of Japanese banks is preparing the launch of a new stablecoin, while China has limited Hong Kong-based projects, highlighting constraints on private issuers.

John Cho, vice president of partnerships at the Kaia DLT Foundation, points out that Asian regulators are moving quickly to establish clear frameworks for cryptocurrencies and stablecoins. According to him, decision-makers are divided: some want to reserve the issuance and management of reserves for established banks, others believe that such a lock could slow down innovation and adoption.

Japan, Singapore and China: divergent trajectories

In Japan, MUFG Bank, Sumitomo Mitsui Banking Corporation and Mizuho Bank plan to issue a stablecoin via the infrastructure of Tokyo fintech Progmat. The project will start with a token backed by the yenbefore being available in a dollar version. After the testing phase, go-live is expected by the end of the fiscal year in March. Meanwhile, Japan is updating its crypto regulations to better prevent illicit activities, including insider trading in digital assets.

Singapore, for its part, is banking on regulatory clarity and infrastructure. StraitsX operates a Singapore dollar-backed stablecoin under the supervision of the Monetary Authority of Singapore (MAS). Tether has also strengthened its regional presence, making USDT accessible through South Korean ATMs using the Kaia blockchain.

The framework established by the MAS in 2023 sets strict standards : audited reserves, sufficient liquidity and guaranteed redemption within five working days. Only compliant issuers can be recognized as “MAS regulated stablecoins”.

China is taking a much more restrictive approach: Ant Group and JD.com have had to suspend their Hong Kong-based stablecoin projects. The People's Bank of China and the Cyberspace Administration point out that private companies should not issue digital assets that can be compared to a currency. Hong Kong therefore remains limited by Beijing's directives, despite its efforts to encourage financial innovation.

Regional outlook

Industry observers Brian Mehler (CEO of Stable) and Dermot McGrath (co-founder of Ryze Labs) believe that Japan, Singapore and Hong Kong are on distinct trajectories. Here is their point of view:

• For Mehler, Japan could become a leader in institutional stablecoins thanks to its regulatory lead and the dynamism of its banking sector.
• McGrath emphasizes that Japanese progress will be careful and supervised.
• In Singapore, the two experts agree on the role of regional hub, favored by the clarity of the legal framework and the selection of reference issuers.
• In Hong Kong, Mehler and McGrath note a more cautious development, focused on professional uses and sensitive to Beijing's decisions.

As stablecoins gain importance, Asia is emerging as a laboratory for their development. Banks, regulators and technology companies are testing new bridges between traditional and digital finance. The coming years will tell which approaches will make it possible to combine innovation and security in this rapidly changing ecosystem.