A report by global crypto research firm Four Pillars, released in April 2025, highlights this fragmented yet progressive journey, noting varied strategies from government-driven initiatives to institution-led efforts.
Several Asian jurisdictions are actively establishing regulatory frameworks to govern the burgeoning stablecoin market.
Singapore: Acknowledged as a regional leader in "regulated innovation," Singapore has already made significant strides. In 2023, the Monetary Authority of Singapore (MAS) implemented a comprehensive regulatory framework for stablecoins pegged to currencies like the Singapore dollar (SGD) or any G10 currency issued in Singapore. This framework mandates 100% reserve backing, redemption at par value within five business days, stringent disclosure, audit requirements, and minimum base capital for issuers. This regulatory clarity has paved the way for licensed institutions to launch SGD-linked stablecoins, such as XSGD by StraitsX, which boasts a market capitalization exceeding US$18 million and has processed over US$8 billion in transaction volume. The MAS framework allows compliant stablecoins to be labelled as "MAS-regulated stablecoins," helping users identify those meeting high stability standards.
Hong Kong: Positioning itself as a crypto-friendly hub, Hong Kong passed its Stablecoins Bill on May 21, 2025. This legislation requires any entity issuing fiat-backed stablecoins in Hong Kong or referencing Hong Kong dollars to obtain a license from the Hong Kong Monetary Authority (HKMA). Licensed issuers must adhere to strict rules regarding reserve asset management, redemption at par, AML/CFT compliance, risk management, and auditing. Only stablecoins from licensed issuers can be marketed to retail investors, and all advertisements must come from authorized issuers. To foster innovation, Hong Kong is also utilizing pilot programs and regulatory sandboxes, with participants including Standard Chartered Bank, Animoca Brands, and Hong Kong Telecommunications.
Japan: Japan has adopted a government-driven approach, providing a clear legal framework that distinguishes stablecoins from other crypto assets, primarily through amendments to the Payment Services Act (PSA) and Banking Act, effective June 2023. While not explicitly defining "stablecoins," Japanese law regulates them as either "digital money-type stablecoins" (pegged to fiat, treated as electronic payment instruments) or "crypto asset-type stablecoins" (regulated as crypto assets or securities). Intermediaries must register with the Financial Services Agency (FSA) and comply with AML/CFT and user protection rules. A new bill aims to update the PSA, introducing government powers to prevent crypto asset flight, more flexible reserve requirements for competitiveness, and a new brokerage category.
In stark contrast, China and India have adopted a more restrictive stance, prioritizing their own Central Bank Digital Currencies (CBDCs).
China: The country has banned cryptocurrencies like Bitcoin and Ether, including their trading and mining, citing risks to its financial system and monetary sovereignty. Consequently, no Chinese tech company has launched RMB-pegged crypto stablecoins for public use, with the focus firmly on the Digital Currency Electronic Payment (DCEP) system, China's official CBDC. However, offshore Chinese yuan-pegged stablecoins like CNH Tether (CNHt) do exist, with a market cap of about US$2.8 million.
India: India's central bank, the Reserve Bank of India (RBI), has expressed concerns that stablecoins, particularly those pegged to foreign currencies, could threaten India's monetary sovereignty and has advocated for a comprehensive ban. India is actively developing its own CBDC, the digital rupee, which launched in pilot phases in late 2022. While the RBI favors a ban on stablecoins, India's market regulator, SEBI, has suggested that multiple regulators could oversee crypto trading. The government also imposes high taxes on crypto gains (30%) and transactions (1% TDS).
A significant trend across Asia is the growing interest in stablecoins pegged to local currencies. This shift aims to reduce reliance on the U.S. dollar in trade and finance, assert monetary control, and mitigate foreign exchange volatility. Besides XSGD in Singapore and CNHt, other examples include Indonesia's Rupiah Token (IDRT) and StraitsX's XIDR, and Japan's GMO JPY (GYEN) which focuses on institutional clients. Thailand and the Philippines are also exploring local stablecoin pilots for cross-border payments and financial inclusion.
The stablecoin market has experienced explosive growth. By May 2025, the average supply of stablecoins in circulation reached US$225 billion, a 41% increase from 2024. Monthly trading volume hit US$625 billion in May 2025. Projections by the Citi Institute suggest the market could reach a base case of US$1.6 trillion by 2030, potentially soaring to US$3.7 trillion in a bull case scenario. This growth is anticipated to be driven by rising adoption, institutional interest, and diverse use cases including interbank settlements, B2B transactions, remittances, and tokenized securities.
Despite the optimism, the journey is not without its challenges. The collapse of TerraUSD in May 2022 and IRON Finance's algorithmic stablecoin in June 2021 serve as stark reminders of the inherent risks. Key obstacles include establishing clear and consistent regulatory frameworks across diverse jurisdictions, overcoming limited awareness and skepticism among users, and navigating competition from government-backed CBDCs.
Interoperability is emerging as a critical factor for the widespread adoption and success of stablecoins. As stablecoins proliferate across various blockchain networks, the ability for them to interact seamlessly is essential to avoid fragmented liquidity and user experiences. Solutions like token frameworks, such as LayerZero's Omnichain Fungible Token (OFT) standard, are gaining traction. LayerZero, for instance, supports a significant portion of the stablecoin market, enabling unified supply management and customizable security across multiple chains.
Collaboration between governments, fintech companies, and traditional financial institutions is also paramount. Partnerships like Singapore's StraitsX with Grab and Ant International for cross-border payments, or Hong Kong's IDA collaboration with The Bank of East Asia, exemplify how joint efforts can drive innovation and build trust.
Asia's stablecoin landscape is a dynamic tapestry of pioneering regulation, cautious observation, and burgeoning innovation. While approaches vary significantly from one nation to another, the overall trajectory points towards increased adoption and integration of stablecoins into the region's financial fabric. The success of this transition will hinge on achieving a delicate balance between fostering innovation and ensuring robust consumer protection, alongside concerted efforts to enhance interoperability and collaboration across the ecosystem. As Asian countries continue to define their relationship with this new asset class, the region is set to play a pivotal role in shaping the future of digital finance.