Analysis of Stablecoin Strategies of Major Global Economies

# The Actual Adoption and Expansion of U.S. Dollar Stablecoins

Author: @BlazingKevin_, the Researcher at Movemaker

In our previous analysis, we argued that the launch of Plasma represents a critical strategic move by Tether. Its aim is to fundamentally transform the company’s business model—shifting from a passive "stablecoin issuer" to an active "global payment infrastructure operator"—in order to recapture the substantial value siphoned off by third-party public blockchains. The urgency and significance of this strategic layout are being continuously amplified by an irreversible macro trend: the real-world adoption of U.S. dollar stablecoins is undergoing a significant paradigm shift and entering a phase of accelerated expansion.

## I. Quantitative Expansion of Total Market Size

First, from a macro data perspective, the overall scale of the stablecoin market is experiencing a new round of structural growth. Compared to the market cycle two years ago, the total market capitalization of global stablecoins has climbed from approximately $120 billion to $290 billion, achieving a 140% increase. This data indicates that the demand for stablecoins has transcended the boundaries of speculation and trading within the crypto-native ecosystem. Instead, stablecoins are emerging as an independent asset class and financial tool, gaining recognition in the broader market.

## II. Explosive Growth in Core Application Scenario: Cross-Border Payments

The most robust manifestation of this growth lies in the vertical field of cross-border payments. Two years ago, practical use cases of stablecoins for cross-border settlements were still in their infancy, with negligible scale. However, according to the latest data, the monthly settlement volume in this field has now exceeded the $60 billion mark. More notably, its growth trajectory—with a 20% to 30% month-on-month increase—clearly demonstrates a steep adoption curve.

Despite this rapid growth, the market penetration rate remains in its very early stages. Compared to the massive $200 trillion annual volume of the traditional global cross-border payment market, the share held by stablecoins is still negligible. This signals enormous room for future growth, potentially tens or even a hundred times larger than the current scale.

## III. Core Driver: "Currency Substitution" Demand in High-Inflation Economies

Behind the accelerated adoption of stablecoins lies a strong real-world economic driver, which is particularly evident in emerging markets and high-inflation countries.

A in-depth analytical report by Cointelegraph in August pointed out that in countries like Venezuela, the sovereign currency (the Bolivar) has essentially lost its core function as a medium for daily commercial transactions due to hyperinflation. Stringent capital controls, a dysfunctional local banking system, and chaotic official exchange rates have collectively created a "scorched-earth" financial environment. In such a context, citizens and businesses are proactively seeking alternative currencies. U.S. dollar stablecoins, which combine sufficient liquidity and value stability, are far more reliable than cash or local bank transfers—and have thus become the market’s spontaneous choice for a "hard currency."

This phenomenon is not unique to Venezuela. Since the global inflation wave in 2022, a number of major economies—including Argentina, Nigeria, Turkey, and Brazil—have been grappling with severe depreciation pressure on their national currencies. This has given rise to massive demand for value preservation and payment hedging.

Venezuela ranks 18th globally in terms of cryptocurrency adoption. Source: Chainalysis  

According to data from Chainalysis, Venezuela has climbed to the 18th position worldwide in cryptocurrency adoption. A more compelling statistic is that in 2024, 47% of the country’s small-value transactions (under $10,000) were conducted using stablecoins, making it the 9th largest cryptocurrency-adopting nation per capita globally. This is no longer a niche practice but powerful evidence that stablecoins have become deeply embedded in the socioeconomic fabric of the country.  

More importantly, this adoption is gradually shifting from the "gray" area of spontaneous civilian use to the "sunlit" realm of official recognition. In Brazil, stablecoins have been integrated into its national real-time payment system, PIX; in Argentina, the use of stablecoins to settle large-value contractual payments (such as house rents) has also gained legal approval. These cases mark that the adoption of stablecoins is evolving to a higher stage—from "spontaneous bottom-up adoption" to "top-down official confirmation."  

# U.S. Dollar Stablecoins: Three Strategic Pillars of U.S. National Interests  

Since the clarification of regulatory frameworks represented by the *Genius Act*, the growth trajectory of U.S. dollar stablecoins has shown exponential acceleration, and their long-term potential is far from reaching its ceiling. This explosive growth is no longer merely a market behavior but has become deeply intertwined with the strategic interests of the United States at the national level. From a macro perspective, the global expansion of U.S. dollar stablecoins can bring at least three major strategic dividends to the U.S.:  

## I. Safeguarding the U.S. Dollar Hegemony: An Asymmetric Extension of Currency Influence  

Over the past decade, the global "de-dollarization" process, though slow, has been advancing steadily and orderly, posing a long-term erosion to the U.S. dollar’s status as an international reserve and settlement currency. The rise of U.S. dollar stablecoins provides a new, asymmetric solution to reverse this trend.  

Particularly in the high-inflation countries mentioned earlier, the popularization of U.S. dollar stablecoins essentially builds a parallel, U.S. dollar-pegged "digital dollarization" economic layer outside the sovereign countries’ financial systems. It can effectively bypass these countries’ capital controls and fragile fiat currency systems, delivering the value proposition of the U.S. dollar directly to end-users. This achieves in-depth currency penetration into these economies without deploying any traditional geopolitical or military means, significantly expanding the actual coverage of the "U.S. dollar ecosystem" (traditional U.S. dollars + digital U.S. dollars) and thus consolidating the U.S. dollar’s international status in a new dimension.  

## II. Alleviating Fiscal Pressure: Creating Structural Demand for U.S. Treasury Securities  

The second strategic pillar lies in supporting the U.S. government’s increasingly heavy fiscal burden, which is of crucial importance. The stability of the U.S. Treasury market, especially its yield levels, is a core concern of U.S. economic policy. As evident from the Trump administration’s extreme sensitivity to fluctuations in the 10-year Treasury yield when handling trade tariff disputes, the Treasury market is the cornerstone of the U.S. macroeconomy.  

The issuance mechanism of U.S. dollar stablecoins inherently creates a massive and growing source of demand for U.S. Treasury securities. Although current stablecoin issuers have already allocated a large portion of their reserve assets to U.S. Treasuries, as their total market capitalization further expands, their role as "major buyers of U.S. Treasuries" will become increasingly pivotal. A Citibank analysis model predicts that by 2030, the potential long-term scale of the stablecoin market could reach $1.6 trillion. The model further points out that this will generate hundreds of billions of U.S. dollars in incremental demand for U.S. Treasuries, mainly from three sources: 1) the reallocation of globally circulating U.S. dollar cash to digital forms (approximately $240 billion); 2) the partial reallocation of global central banks’ base money (M0) (approximately $109 billion); and 3) the reallocation of U.S. dollar deposits held by foreign entities to stablecoins (approximately $273 billion). This new purchasing power will play a non-negligible positive role in stabilizing U.S. Treasury yields and reducing the government’s financing costs.  

## III. Consolidating First-Mover Advantage: Dominating Rule-Making in the Digital Asset Era  

Finally, the United States is making every effort to secure its leading position in the global crypto market, and U.S. dollar stablecoins are the core vehicle to achieve this goal. The 180-degree shift in regulatory sentiment—from suppression in the past to embracement today—clearly reveals the evolution of its strategic intentions. When policymakers realized that crypto technology could not be completely eliminated, they quickly shifted to a strategy of "incorporation" and "utilization," i.e., integrating this emerging field into their own regulatory and economic territory by establishing a sound legal framework.  

This strategy is not unique to the United States but a competition among major global economies. The ultimate goal of all countries and regions proactively legislating for stablecoins is to seize a favorable position in this new fintech track and share the dividends of the future. By supporting U.S. dollar stablecoins, the United States aims to ensure that it remains firmly in control of the underlying settlement standards for the global digital economy in the future.  

# Current Status of Non-U.S. Dollar Stablecoins: Structural Dilemmas and Strategic Inevitability  

## I. Extreme Concentration of the Market Structure  

Despite the strong expansion momentum of U.S. dollar stablecoins, a healthy global digital asset ecosystem should ideally feature a pattern of coexistence of multiple fiat-backed stablecoins. However, real-world data reveals an extremely imbalanced picture: the market space for non-U.S. dollar stablecoins is being severely squeezed.

# Market Share of Stablecoins Backed by Different Fiat Currencies

Source: rwa.xyz  

Data shows that this segment has experienced a dramatic contraction. In 2018, the early stage of market development, non-U.S. dollar stablecoins accounted for 48.98% of the market share, almost on par with U.S. dollar stablecoins (51.02%). However, to date, their total market share has collapsed to a mere 0.18%. In terms of absolute scale, the total market capitalization of non-U.S. dollar stablecoins is only $526 million, of which euro-backed stablecoins ($456 million) dominate with nearly 88.7% of the share. This indicates that no other fiat currency besides the U.S. dollar has been able to build effective market competitiveness in the stablecoin sector.

## II. Structural Risk: The "Exchange Rate Tax" for Users Outside the U.S. Dollar Zone  

As the stablecoin market becomes increasingly integrated with real-world economic activities, this "unipolar system" dominated by U.S. dollar stablecoins poses potential structural risks to users in non-U.S. dollar zones—especially in developed economies that also operate in a low-inflation environment. The core issue is that these users are forced to bear unnecessary foreign exchange fluctuation risks when participating in the global crypto economy.  

This problem can be illustrated through a typical user journey:  

Suppose a user in Tokyo purchases Ethereum (ETH) using Japanese yen (JPY) on the local regulated exchange bitFlyer. When she wants to deploy these assets in global DeFi protocols (e.g., lending on Aave or providing liquidity on Uniswap), she will find that the core liquidity pools of these major protocols are almost entirely denominated in U.S. dollar stablecoins (such as USDC and USDT).  

The "JPY balance" in her bitFlyer account cannot be directly transferred to the on-chain world. To participate in DeFi, she must hold an on-chain, tokenized stable asset. In the absence of yen-backed stablecoins with sufficient liquidity and composability, her only option is to exchange ETH for U.S. dollar stablecoins. This single step adds an unforeseen layer of JPY/USD exchange rate exposure to her portfolio. Whether she profits or incurs losses in the future, she will have to bear exchange rate fluctuations when converting back to yen—equivalent to paying an invisible "exchange rate tax."

## III. Systemic Risks and the Strategic Necessity of Diversification  

From a more macro perspective, the liquidity lifeline of the entire crypto economy is currently almost entirely tied to U.S. dollar stablecoins, creating a potential and highly concentrated systemic risk point. Any extreme regulatory changes, technical failures, or monetary policy shocks originating in the U.S. could have catastrophic impacts on global markets.  

Therefore, promoting the development of high-quality stablecoins backed by currencies such as the euro, British pound, and Japanese yen holds significance far beyond market competition itself. It is equivalent to building a "risk isolation wall" and a "systemic backup plan" for the global crypto economy. A diversified multi-fiat stablecoin ecosystem can effectively hedge against risks arising from over-reliance on a single national currency or regulatory system, enhancing the anti-fragility of the entire system.  

For major economies like the EU and Japan, promoting stablecoins regulated by their domestic financial systems and pegged to their national currencies is no longer a mere commercial endeavor. Instead, it is an extension of safeguarding their "monetary sovereignty in the digital age" and a national-level strategic task. Although non-U.S. dollar stablecoins currently lag far behind U.S. dollar stablecoins in scale and liquidity, their existence is logically sound, and their development is an inevitable historical trend. Below, we will provide a detailed overview of the development of major non-U.S. dollar stablecoins.

# Euro-Backed Stablecoins  

Against the backdrop of the U.S. dollar’s absolute dominance in the global stablecoin market, the evolution path of euro-backed stablecoins offers an excellent case study for observing how non-U.S. dollar currencies attempt to break through under regulatory impetus.  

## I. Two Phases of Market Evolution: From Early Exploration to Regulatory-Driven Acceleration  

The development of euro-backed stablecoins can be clearly divided into two phases, with the EU’s *Markets in Crypto-Assets Regulation (MiCA)* serving as the watershed:  

- **Early Exploration Phase (Pre-MiCA)**: The landmark project of this phase was STASIS Euro (EURS), launched in 2018. As a pioneer in the market, EURS struggled with slow growth for a long time, with its market capitalization lingering between tens of millions and 100 million euros. This reflected the lack of a clear regulatory framework and institutional demand, confining the market to a small group of crypto enthusiasts in Europe and preventing the formation of scale effects.  

- **Accelerated Development Phase (Driven by MiCA)**: The proposal and gradual implementation of the MiCA Regulation acted as a fundamental game-changer. It provided unprecedented legal certainty for market participants, attracting major industry players to formally enter the space. Stablecoin issuers Circle (issuer of USDC) and Tether (issuer of USDT) launched Euro Coin (EURC) and Euro Tether (EURT), respectively. Circle, in particular, as MiCA approached, actively advanced its multi-chain deployment strategy between 2023 and 2024, expanding EURC to major public blockchains such as Ethereum, Solana, and Avalanche.  

The results of this strategic transformation are evident in the data: between 2023 and October 2025, the total market capitalization of euro-backed stablecoins grew rapidly, reaching $456 million today. Circle’s EURC contributed the majority of this growth, with its market capitalization surging by 155% in 2025—from $117 million at the start of the year to $298 million. Although its absolute value still lags far behind U.S. dollar stablecoins, its growth rate demonstrates strong catch-up momentum.  

## II. Assessment of Market Acceptance: Infrastructure in Place, Network Effects Insufficient  

- **Exchange and DeFi Integration**: The basic infrastructure for euro-backed stablecoins has been established. All top-tier exchanges, including Coinbase, Kraken, and Binance, have listed EURC or EURT and offer trading pairs with major crypto assets. Meanwhile, leading DeFi protocols such as Aave, Uniswap, and Curve have also completed integration. Particularly in protocols optimized for stablecoin swaps like Curve, the liquidity scale of euro-backed stablecoin pools is steadily increasing.  

- **Potential Application Scenarios**: In the fields of payments and remittances, some Web3 payment applications and fintech companies have begun small-scale pilots, using euro-backed stablecoins for instant settlements within the eurozone and cross-border payments.  

- **Core Barrier – Perception Gap**: Despite the initial completion of infrastructure, euro-backed stablecoins face a significant "perception gap" and "network effect deficit." In the mental model of most global crypto users, the concept of "stablecoin" is almost synonymous with "U.S. dollar stablecoin," creating significant resistance for euro-backed stablecoins in acquiring new users and liquidity.  

## III. Dual Dilemmas for Future Development  

- **Potential Competition from the Official Digital Euro (CBDC)**: The European Central Bank (ECB) is actively advancing the research and development of the digital euro. Once the digital euro—directly issued by the central bank and free of credit risk—is launched, it will pose direct and asymmetric competition to privately issued euro-backed stablecoins. At that point, the digital euro is likely to gain overwhelming advantages in regulatory status and application scenarios, squeezing the living space of private stablecoins.  

- **Business Model Challenges from Interest Rate Differences**: This is a more fundamental constraint at the economic level. The core profit of stablecoin issuers comes from interest income on their reserve assets (mainly short-term government bonds). Historically, interest rates in the eurozone have long been lower than those in the U.S. This means that, for the same scale, the profitability of issuing euro-backed stablecoins is inherently weaker than that of issuing U.S. dollar stablecoins. This profitability gap directly limits issuers’ ability to drive DeFi protocol integration and user adoption through profit-sharing or liquidity incentives, creating a negative cycle that hinders their cold start and scale expansion.  

# Australian Dollar-Backed Stablecoins  

The Australian dollar-backed stablecoin market presents a development paradigm distinctly different from that of the eurozone. Although its publicly reported total market capitalization is approximately $20 million (ranking second among global non-U.S. dollar stablecoins), its most notable feature is the top-down exploration led by traditional banking institutions rather than crypto-native companies.  

## I. Dominant Force in the Market: The Entry of Traditional Banks  

The most prominent stablecoin projects in Australia come from two of the country’s "Big Four Banks"—Australia and New Zealand Banking Group (ANZ) and National Australia Bank (NAB)—which launched A$DC and AUDN, respectively. This phenomenon is extremely rare globally, marking the direct recognition of the potential value of stablecoin technology by the mainstream financial system. However, it is worth noting that these bank-issued stablecoins are currently mainly limited to inter-institutional settlements and internal pilots, and have not yet been opened to the public on a large scale.  

The supply of Australian dollar-backed stablecoins for the retail and crypto trading markets is primarily filled by third-party payment companies, with AUDD being a representative example.  

### AUDD (by Novatti)  

- **Issuer Background**: Novatti is a licensed payment service provider listed on the Australian Securities Exchange (ASX), with dual expertise in compliance and fintech.  

- **Target Audience**: It has a clear positioning, mainly serving three types of users: cryptocurrency traders, individuals or businesses with Australian dollar cross-border remittance needs, and Web3 application developers.  

- **Technical Path**: AUDD chose to issue on public blockchains known for payment efficiency, such as Stellar, Ripple, and Algorand, rather than Ethereum—reflecting its strategic focus on payments and settlements.  

- **Market Position**: Currently, AUDD is the most accessible and usable Australian dollar-backed stablecoin for retail users.  

## II. Core Development Dilemmas: Dual Uncertainties from Regulation and Official CBDC  

- **Lack of a Regulatory Framework**: Unlike the EU, which has fully implemented the MiCA Regulation, Australia had not yet introduced a comprehensive and clear legal framework for stablecoins as of October 2025. This regulatory lag constitutes the biggest bottleneck for market development. Even powerful banks like ANZ and NAB can only conduct limited exploration and cannot promote their products to the public on a large scale when regulatory definitions remain unclear. This severely limits the development speed and scale of the entire Australian dollar-backed stablecoin ecosystem.  

- **Potential Competition from the Official Digital Australian Dollar (CBDC)**: The Reserve Bank of Australia (RBA) has maintained a positive stance on researching the issuance of an official CBDC and recently completed relevant pilot projects successfully. This progress introduces a second layer of uncertainty to the market. If the RBA decides to officially issue a digital Australian dollar in the future, this "ultimate risk-free asset"—directly liabilities of the central bank and free of any credit risk—will compete directly with stablecoins issued by commercial banks or private institutions. Whether the two will coexist complementarily or compete as substitutes, and what the long-term market structure will look like, remains unclear.  

# Korean Won-Backed Stablecoins  

The Korean market presents a unique paradox: despite being a country with extremely high acceptance of crypto assets, it lacks the "soil" for stablecoins to thrive. This stands in stark contrast to the bottom-up adoption driven by civilians in high-inflation countries. The fundamental reason is that South Korea’s highly developed financial technology (FinTech) and real-time payment systems already meet most users’ daily needs, thereby weakening the "endogenous motivation" for stablecoins to serve as alternative payment solutions.  

Therefore, the only viable path for Korean won-backed stablecoins to gain market adoption is a "top-down" strategic push led by large institutions. This may include the following scenarios:  

- Led by the government or tech giants such as Naver and Kakao, seamlessly integrating stablecoins into existing payment or remittance backends.  

- Promoted by major exchanges, replacing physical Korean won with Korean won-backed stablecoins as the core trading medium.  

- Launched by platforms with innovative incentives or micro-payment functions based on stablecoins.  

However, before these scenarios can be realized, the market faces a series of deep-seated structural obstacles.  

## I. Core Development Dilemma: Legislative Vacuum and Corporate Caution  

The current primary bottleneck is the severe lag in legislation. Although five relevant bills have been pending in the National Assembly, the legislative process has been extremely slow. Based on the current progress (as of October 2025), even if the Financial Services Commission (FSC) submits the government’s proposal on schedule, the relevant laws will not take effect until early 2027 at the earliest. Until then, no enterprise can legally conduct stablecoin business on a large scale within a legal framework.  

This regulatory uncertainty has directly led to fragmentation and widespread caution in South Korea’s business community:  

- **Small Enterprises**: They have shown active willingness to participate, but their activities are more for public relations purposes and market visibility. They generally lack the capital, compliance capabilities, and technical expertise required to operate stablecoin businesses on a large scale.  

- **Large Enterprises (Chaebols)**: They have generally adopted an extremely prudent "wait-and-see" strategy. Their core considerations are twofold: first, the high legal risks; second, their assessment that the actual commercial returns from shifting to blockchain technology in the highly competitive domestic market are not sufficient to justify investing huge resources.  

Currently, all activities related to Korean won-backed stablecoins remain at the superficial level of theoretical discussions and trademark applications.  

## II. Four Structural Obstacles  

To summarize, the dilemmas facing Korean won-backed stablecoins can be attributed to four interrelated structural obstacles:  

1. **Debate Over Technical Paths: Private Chains vs. Public Chains**  

Regulatory authorities such as the Bank of Korea and the FSC, prioritizing risk controllability, strongly favor launching stablecoins on a "customized private chain with Korean characteristics" for the first time. However, this idea is generally regarded as "disappointing" by the industry. It not only violates the core values of blockchain—openness, permissionlessness, and interoperability—but also risks further fragmenting South Korea’s financial system into multiple disconnected private networks, creating inefficient "walled gardens."  

2. **Dual Constraints on the Reserve Asset Market: Scarcity and Low Returns**  

The business model of stablecoins is rooted in reserve assets, and South Korea faces dual challenges here. First, its domestic financial market lacks short-term government bonds with a maturity of less than one year, leaving stablecoins without the most ideal and safest category of reserve assets. Second, even alternative assets such as monetary stabilization bonds lack sufficient market scale and liquidity to support large-scale stablecoin issuance. More critically, the approximately 2% yield of South Korea’s bond market is far lower than the U.S. level of around 4%, which greatly undermines the profit motivation of issuers to operate stablecoin businesses and makes them commercially unattractive.  

3. **Technical Misunderstanding in Public Chain Regulation**  

The South Korean government’s widespread view that "public chains are too risky and difficult to regulate" is, to some extent, a misunderstanding of existing technologies. In fact, through well-designed smart contracts, effective regulation and compliance control of user identity verification (KYC) and capital flows can be achieved on open public chains.  

4. **Collective Lack of Vision and Urgency**  

The most fundamental issue is that none of the key stakeholders—from the government and financial institutions to large enterprises—have put forward a clear goal or a specific plan for the future of Korean won-backed stablecoins. The entire market is trapped in a state of "collective waiting" and strategic stagnation. However, the evolution of global blockchain finance will not wait for any latecomers. If South Korea waits until 2027 to launch its stablecoin on a closed private chain, it will find itself far behind the rest of the world by then.  

# Hong Kong Dollar-Backed Stablecoins  

The development path of Hong Kong dollar-backed stablecoins presents a complex landscape shaped by the interplay of three forces: clear local regulations, active market participation, and prudent regulatory oversight from the Chinese mainland. Currently, Hong Kong is at a critical turning point, with the market entering a new phase of "partial cooling" and structural differentiation after an initial period of overheating.  

Despite market fluctuations, Hong Kong’s official stance remains firm. Secretary for Financial Services and the Treasury Christopher Hui has publicly stated that the licensing application process for compliant stablecoins is progressing in accordance with the established framework, and the first batch of licenses is expected to be issued in early 2026, following the original timeline.  

## I. Hong Kong’s Proactive Layout and Early Market Overheating  

Hong Kong’s strategic goal of becoming a leading global virtual asset hub is very clear. To this end, the Hong Kong government has adopted a series of proactive measures with a clear pace:  

- **March 2024**: Launched a "sandbox" for stablecoin issuers, providing a regulated testing environment for the market.  

- **August 1, 2025**: Officially implemented the *Stablecoins Ordinance*, establishing the world’s first comprehensive and clear legal framework for stablecoin regulation.  

This leading regulatory certainty greatly stimulated market enthusiasm, attracting more than 77 enterprises to express their intention to apply—at one point making this sector appear "overheated." However, the "rush to enter" by a large number of financial institutions with Chinese mainland backgrounds aroused prudent concern from mainland regulatory authorities.  

## II. Prudent Intervention by Mainland Regulators  

The recent "window guidance" provided by mainland regulatory authorities to relevant Chinese mainland-funded institutions is not aimed at stifling innovation, but is based on the following considerations:  

- **Risk Isolation**: Ensuring that potential risks of Hong Kong’s virtual asset business do not spread to the large, strictly regulated parent financial systems in the Chinese mainland through equity ties.  

- **Capital Controls**: Preventing mainland funds from flowing into Hong Kong’s virtual asset market through non-compliant channels.  

- **Market Order**: Requiring Chinese mainland-funded institutions to maintain a low profile, avoid excessive promotion or creating media hype, and prevent irrational overheating of the market.  

The tension between "Hong Kong’s global ambition" and "mainland China’s financial prudence" is the core context for understanding the current dynamics of the Hong Kong dollar-backed stablecoin market.  

# III. Current Market Situation: Partial Cooling, Slower Expectations, and Structural Differentiation  

The intervention of mainland regulators has had an immediate impact on the market, and the current situation can be summarized as follows:  

- **Emergence of the First Batch of Withdrawals**: Before the official application deadline on September 30, at least four financial institutions with Chinese mainland backgrounds, including Guotai Junan International, have publicly announced their withdrawal from stablecoin license applications or the suspension of RWA (Real-World Assets)-related businesses. The market expects that some previously active Chinese mainland-funded banks (such as Bank of China (Hong Kong)) may also delay their application processes.  

- **Strategic Shift to "Doable but Not Speakable"**: The guidance from mainland regulators is not a comprehensive ban but a requirement to "maintain a low profile." This has forced Chinese mainland-funded institutions to shift their strategy from high-profile expansion in the early stage to more cautious internal research and quiet layout.  

- **Market Structural Differentiation**: The current "cooling down" is partial and asymmetric. The affected entities are highly concentrated in institutions with Chinese mainland backgrounds. Meanwhile, local Hong Kong institutions and other international financial institutions continue to advance their virtual asset businesses in an orderly manner within the existing legal framework.  

- **Expectations for Licensing Rhythm**: The market generally expects that the first batch of licenses will follow a prudent pace similar to that of VASP (Virtual Asset Service Provider) exchange licenses. Specifically, only a very small number (possibly 1 to 2) of licenses will be issued by the end of 2025 or early 2026, and subsequent issuances will be gradually expanded based on market development.  

# IV. Strategic Dilemmas Facing Hong Kong Dollar-Backed Stablecoins  

- **Uncertainty Driven by Mainland Regulatory Influence**: This is the core dilemma at present. Chinese mainland-funded institutions are an indispensable part of Hong Kong’s financial market. Their collective "suspension" or "low-profile stance" will undoubtedly affect the initial market scale, liquidity depth, and breadth of application scenarios of Hong Kong dollar-backed stablecoins. Hong Kong authorities need to seek a delicate dynamic balance between promoting market opening and responding to the regulatory concerns of the Chinese mainland.  

- **Conflict Between Development Rhythm and Global Competition**: Compared with the "comprehensive heating up" of the U.S. market, Hong Kong has adopted a more "restrained and prudent" development pace under the influence of the Chinese mainland. While this steady rhythm helps control risks, it also exposes Hong Kong to the risk of missing the time window and being left behind by competitors in the global financial innovation race.  

- **Trade-Off Between Risks and Dividends**: The intervention of mainland regulators has essentially forced Chinese mainland-funded institutions to re-evaluate the risk-return ratio of being "first movers." Although early entrants can enjoy the greatest policy dividends and first-mover advantages, they must also bear the highest costs of market and compliance trials and errors.  

# Japanese Yen-Backed Stablecoins  

Japan’s stablecoin development path is a top-down, well-designed reform of financial infrastructure driven by the government against the backdrop of its unique macroeconomy. Its core driving force does not come from private speculative demand but from the urgent need to address the long-standing structural economic dilemmas facing the country, such as "low interest rates, low growth, and deflationary pressure." Stablecoins are highly expected here, regarded as a policy tool that can improve financial efficiency, activate capital flows, and inject new impetus into the sluggish domestic payment system and the illiquid government bond market.  

To this end, the Japanese government has established a stablecoin regulatory framework widely recognized as the most rigorous in the world through a series of legislations, including the *Amended Payment Services Act*. Its strategic intention is extremely clear: to transform stablecoins from pure "crypto assets" into "financial infrastructure" that serves national strategies.  

## I. From Theory to Practice: Launch of the First Compliant Product  

Currently, Japan’s stablecoin market has officially moved from the "theoretical preparation phase" to the "commercial practice phase."  

- **Landmark Event**: Fintech startup JPYC Inc. has obtained regulatory approval and will issue "JPYC"—Japan’s first fully compliant yen-backed stablecoin—in the autumn of 2025.  

- **Key Cooperation Model**: This issuance reveals Japan’s market access model: "technological innovation by startups (JPYC Inc.) + compliance infrastructure by leading platforms (Progmat Coin of Mitsubishi UFJ Trust and Banking Corporation)." This indicates that regulators are open to innovation, but the prerequisite is that innovation must be anchored within the strong compliance framework of licensed financial institutions.  

- **Technical Path and Commercial Ambition**: "JPYC" plans to be issued on multiple major public blockchains such as Ethereum and Avalanche, reflecting its pursuit of openness and composability under compliance requirements. Its goal of "issuing 1 trillion yen within three years" and the attraction of Series A investment from international giants like Circle both demonstrate its strong determination to seize the market.  

JPYC is not positioned to replace fiat currency; instead, as "on-chain yen," it aims to be a bridge that seamlessly extends the functions and value of the Japanese yen to the global digital economy.  

## II. Core Application Scenarios  

- **International Remittances and Corporate Settlements**: It provides nearly real-time and low-cost payment solutions for international students, cross-border e-commerce, etc., and uses smart contracts to simplify B2B payment processes and cross-border fund management between enterprises.  

- **Building a Local Web3 Ecosystem**: As an on-chain "native liquidity carrier" denominated in Japanese yen, it provides a stable value medium for Japan’s large-scale Web3 applications such as games and NFTs, and builds the underlying financial infrastructure for them.  

## III. Multi-Level National Strategic Intentions  

The launch of yen-backed stablecoins embodies Japan’s multi-level strategic considerations:  

- **Defensive Strategy: Competing for Digital Currency Sovereignty**  

This is the most core measure. By launching compliant yen-backed stablecoins, Japan aims to break the monopoly of U.S. dollar-backed stablecoins in the digital world, provide a non-U.S. dollar option for Japan’s cross-border trade and international settlements, and thereby reduce reliance on traditional systems such as SWIFT.  

- **Economic Strategy: Activating the Government Bond Market and Innovating Monetary Policy Tools**  

This is an ingenious "two-birds-with-one-stone" design. By requiring a large allocation of reserve assets to Japanese Government Bonds (JGBs), it not only creates a new, structural buyer for the long-term undersupplied government bond market (helping to lower the government’s financing costs) but also paves the way for the central bank to potentially use stablecoin reserve requirements as a new monetary policy tool to adjust market liquidity in the distant future.  

- **Development Strategy: Promoting the Upgrade of Financial Infrastructure**  

The approval of JPYC will act as a "catfish effect" in Japan’s conservative financial system, activating the innovation vitality of local giants such as Sony and Mizuho, promoting the modernization of the domestic payment system, and safely connecting Japan’s financial system to the global Web3 ecosystem in a highly compliant manner—preventing Japan from falling behind in the next wave of digital finance.  

## IV. Challenges and the Demonstration Effect of the "Japanese Model"  

- **Business Model Challenge**: In a zero-interest-rate environment, the traditional profit model relying on interest from reserve assets becomes completely ineffective. This requires issuers to quickly achieve a huge issuance scale and maintain operations through the economies of scale of "small profits but quick turnover."  

- **Extreme Risk Prevention and Control Framework**:  

 - **Legal Qualification**: Stablecoins are strictly defined as "electronic payment tools," fundamentally stripping them of their speculative attributes.  

 - **Subject Restriction**: Issuers are limited to licensed financial institutions such as banks and trust companies.  

 - **Unique "Asset Supplement Clause"**: Issuers are required by force to use their own capital to make up for the shortfall when reserve assets depreciate. This is a strong constraint not seen in European or American regulations, which greatly protects the safety of users’ assets.  

 - **Mandatory Anti-Money Laundering (AML)/Know Your Customer (KYC) Checks**.  

In summary, the "trust-based," "strongly regulated," and "semi-centralized" stablecoin model pioneered by Japan has achieved the ultimate in terms of security and compliance. It provides a highly valuable template for other Asian economies such as Hong Kong and South Korea that also prioritize financial stability, and may lead the entire East Asian region to form a new regulatory consensus on the path of "compliant stablecoins."  

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