Can Asia’s banks make stablecoins work across borders?

Asia’s big but fragmented banking markets pose a key challenge.

Asia’s banks are developing stablecoins to keep deposits and capture cross-border payments, but fragmented regulations and gaps in payment infrastructure could limit how quickly the technology scales.

“Banks are rolling out stablecoin capabilities to prevent deposits and payments from shifting to nonbank issuers,” Michael Benz, head of the Asia-Pacific region at AMINA Group AG, said in an emailed reply to questions.

He said issuing their own stablecoins could let banks keep money within their networks rather than lose corporate clients to nonbank platforms.

Stablecoins could also allow banks to move money across borders almost immediately and around the clock, said Kelvin Tan, CEO at Audax Financial Technology Pte Ltd., a banking-as-a-service provider.

In a column published by Asian Banking & Finance in August, Tan said banks need systems that could process and validate transactions in real time, connect with multiple payment technologies and partners, and reconcile funds quickly to capture those benefits.

“For banks in Asia, the stablecoin question is no longer just a matter of if, but when—and whether they’re ready to build the next layer of trusted, cross-border financial infrastructure,” he said.

Japan’s three megabanks said in June they plan to conduct commercial transactions using stablecoins by March 2027.

The Hong Kong Monetary Authority granted stablecoin issuer licences in April to Hongkong and Shanghai Banking Corp. Ltd. (HSBC) and a joint venture backed by Standard Chartered Bank (Hong Kong) Ltd.

Asia’s big but fragmented banking markets add another challenge, with stablecoin rules differing across jurisdictions, Tan said.

The technology could give banks greater control over payments and deposits, but its benefits depend on whether banks can connect their systems and operate across different regulatory frameworks.

Questions to ponder

• Can banks issue stablecoins at scale without further fragmenting payment networks?
• How can Asian banks connect stablecoin systems across different regulatory regimes?
• Will stablecoins significantly reduce the cost and time of cross-border payments?