Asia’s Stablecoin Race Sees Top Companies Vie for Dominance, Test Policy Lines

Asia’s stablecoin competition is splitting between bank-backed domestic currencies and U.S. dollar incumbents as Japan, Singapore, and Hong Kong formalize new frameworks that could crystallize how crypto might coexist with monetary policies across the region.

Over the past week, two key developments marked the intensifying stablecoin competition in Asia: Japan's mega-bank consortium plans and China’s blockade on Hong Kong projects, which have exposed the regulatory ceiling for private issuers.

Observers see stablecoin competition across Asia as a test of how far governments will let private infrastructure reshape national money systems without losing control over capital flows.

“Most lawmakers and regulators across Asia are working to expedite the introduction of crypto and stablecoin-specific laws and frameworks,” John Cho, vice president of partnerships at Kaia DLT Foundation, told Decrypt. “Enthusiasm for the potential efficiencies and optimizations brought to legacy infrastructure via stablecoins is genuine and consistent across the region.”

Yet this also shows a “divide” among Asia’s lawmakers and regulators, with one side “arguing that stablecoin issuance and reserve management should only be in the domain of existing traditional institutions,” while the other side “argues that this will limit innovation and speed of growth and adoption,” Cho noted.

Japan’s project brings together MUFG, SMBC, and Mizuho to issue a yen-pegged coin through MUFG’s Progmat platform by March next year, per a report from Nikkei.

It comes as Japan moves to expand its financial rulebook to cover digital assets, including a proposed ban on crypto insider trading that would empower securities regulators to investigate illicit activity.

Across the sea, China is moving in the opposite direction, ordering major tech firms to halt their stablecoin plans in Hong Kong, months after players such as Standard Chartered, Animoca Brands, and HKT Group formed Anchorpoint Financial in August to apply for a stablecoin issuer license under the city’s newly instituted digital assets framework.

In Singapore, StraitsX operates under full Monetary Authority of Singapore oversight, with its SGD-backed XSGD token now listed on Coinbase as of late September. Tether, meanwhile, continues to expand across Asia, deploying USDT on the Kaia blockchain for South Korean ATMs in July and integrating with LINE’s regional ecosystem.

Convergence and division

Asia is shifting “from policy design to controlled rollouts,” Dermot McGrath, co-founder of venture capital firm Ryze Labs, told Decrypt.

For Japan, the progress will be “steady but measured,” while Hong Kong would remain “sensitive to Beijing's red lines.” Singapore, meanwhile, would look to “crown a few reference issuers” as it uses its trust benchmark to bring stablecoin products to market.

Regulators “don't want to lose control, but financial institutions don't want to be stuck in neutral for too long either,” McGrath said.

“We’re seeing three distinct approaches emerge—the mega-bank consortium model, the laissez-faire or ‘Switzerland’ model, and the traditional conservative model,” Brian Mehler, CEO of Stable, told Decrypt.

Japan “could emerge as the institutional leader given their head start and banking consortium momentum,” Mehler said, adding that Singapore will likely continue as “the innovation hub by leveraging the infrastructure and the regulatory clarity that attracts global players.” Hong Kong, meanwhile, is "carving out its place in the enterprise-focused applications where compliance is paramount.”

More broadly, these developments appear to be a “natural modernization forced in part by the ISO 20022 structured and hybrid address implementation deadline that we are on the cusp of seeing come into effect,” Kevin O’Brien, founder and CEO of Verdicti Ventures, told Decrypt.

“Each jurisdiction will have its own local nuanced consideration and approaches,” yet technical “adaptability” around those might still be “early in its innovation” versus what’s current in “generalist public stablecoins,” he said.