Asia’s financial landscape is undergoing a subtle yet significant transformation, with banks across the region increasingly turning to stablecoins to counteract deposit flight and recover transaction revenues. It’s a quiet revolution that’s reshaping cross-border finance, as financial institutions in Asia strategically adopt stablecoins like USDT and USDC to fortify their positions.
Stablecoins Gaining Traction
In the bustling financial hubs of Asia, major banks in Korea, Japan, and Hong Kong are taking proactive steps to incorporate stablecoins into their operations. Amy Zhang, Head of Asia at Fireblocks, highlighted this shift in a conversation with CoinDesk, noting that these banks are exploring local-currency stablecoins as a safeguard against potential deposit erosion. “If I’m not one of the banks banking Circle or banking Tether, am I going to lose deposits?” Zhang pondered, underscoring the urgency behind these moves.
Korean banks, including industry giants KB Kookmin and Shinhan, are already forming a consortium to launch a Korean won stablecoin by 2026. This initiative comes in direct response to the surging use of USDT and USDC for cross-border transactions. Meanwhile, in Japan, banking behemoths MUFG, SMBC, and Mizuho are piloting yen-pegged stablecoins. Their goal? To streamline trade finance and reduce reliance on traditional cross-border payment systems.
Payment Service Providers Leading the Charge
As banks explore stablecoins, payment service providers (PSPs) are rapidly adopting them, shifting away from costly traditional banking channels. Zhang noted that the conversation around stablecoins has evolved significantly over the past year. “A year ago, PSPs were asking if they should do stablecoins,” she said. “Now they say, ‘I’m moving millions of client flows; I need a better wallet.'”
This shift is evidenced by the increased transaction volume at Fireblocks, where stablecoins now account for about half of all transactions. Notably, e-commerce giants across Asia, such as China’s JD.com, are jumping on the bandwagon, aiming to cut supplier-payment costs using stablecoins.
In Hong Kong, PSPs like Tazapay are leveraging Circle’s USDC to efficiently route cross-border payments, facilitating instant payouts for content creators and gamers in the region’s emerging markets. According to Visa Analytics, stablecoin volumes spike by 30% on weekends, highlighting their critical role in retail and gig economy transactions.
A Divergence in Stablecoin Adoption
While Tether’s USDT reigns supreme in emerging Asian markets due to its liquidity and accessibility, USDC is gaining traction in highly regulated financial hubs like Singapore and Hong Kong. This divergence underscores the strategic considerations behind stablecoin adoption, as institutions weigh factors like regulatory compliance and market dynamics. For a deeper dive into the regulatory implications, see Bitcoin Price Warnings Emerge, Stablecoins Score Regulatory Win.
As stablecoins become entrenched in the region’s financial infrastructure, the broader implications are profound. Asia’s quiet embrace of stablecoins may soon become a headline story in the evolving narrative of digital finance. But as the transformation unfolds, questions linger about the potential for new IPOs that could capitalize on this trend.
Broader Market Context
In the backdrop of this stablecoin surge, Bakkt Holdings is making waves with its plans to raise $1 billion to buy Bitcoin, signaling a growing trend of public companies allocating capital to BTC. This move comes amidst a challenging period for Bakkt, which has faced setbacks like the loss of significant clients and operational warnings. This follows a pattern of institutional adoption, which we detailed in US Debt Exceeds $37 Trillion: Why Bitcoin and Stablecoins Could Be Crucial.
Meanwhile, the cryptocurrency market remains dynamic, with Bitcoin holding steady above $107K amid a major options expiry. Ethereum is testing key resistance levels, and gold prices are fluctuating in response to economic indicators. These developments highlight the interconnected nature of traditional and digital assets.
As Asia’s financial institutions continue to embrace stablecoins defensively and corporate users integrate them pragmatically, the region is quietly transforming its cross-border finance infrastructure. This shift could redefine stablecoin’s role in global finance. The question is, will Asia’s stablecoin story prompt the next wave of innovation in the financial world? Only time will tell.
Source
This article is based on: Asia Morning Briefing: Asia’s Banks Look to Stablecoins to Prevent Deposit Flight
Further Reading
Deepen your understanding with these related articles:
- Peter Schiff Says He ‘Gets Bitcoin’ But Not USD-Pegged Stablecoins, Floats Gold-Backed Token Plan
- Market Cap of Euro Stablecoins Surges to Nearly $500M as EUR/USD Rivals Bitcoin’s H1 Gains
- Circle Stock in Up Only Mode Even as Bitcoin, Crypto Market Struggle—Why?
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
