Stablecoins could split Asia’s payment systems further

Some 44% of finance professionals may use digital currencies within two years.

Stablecoins could make payment systems in the Asia-Pacific region more fragmented in the near term as markets adopt different rules and infrastructure, limiting their ability to work across borders even as banks increase their use.

“Regulatory requirements for licensing, reserve management, and compliance continue to diverge across markets, limiting interoperability between stablecoins issued under different regimes,” Anton Ruddenklau, a partner and head of financial services at KPMG LLP, told Asian Banking & Finance.

He said markets are taking different approaches to regulation, infrastructure, and commercial priorities.

Stablecoin adoption is expanding across the Asia-Pacific region. Hong Kong introduced its stablecoin regime in July 2025, the Monetary Authority of Singapore announced consultations on stablecoin rules in September 2026, and Japan’s three biggest banks plan to jointly issue a stablecoin by March 2027.

Banks and payment companies see stablecoins as a way to make cross-border payments faster and available around the clock.

Naveen Mallela, global head of payments at Standard Chartered Plc, said stablecoins could also help businesses see where their money is in real time, keep less cash in different markets before making payments, and move funds more efficiently.

Mallela expects stablecoins to coexist with traditional bank-to-bank networks, instant payments, and digital bank deposits, giving businesses more ways to move money.

Stablecoin payments totalled about $350b to $550b in 2025, according to Boston Consulting Group, Inc. Payments between businesses accounted for about 40%, or as much as $230b.

David Chan, managing director and a partner at Boston Consulting, said the larger benefit could come from letting companies keep less cash across markets and move it when needed.

“The biggest stablecoin savings may ultimately sit on the balance sheet, not on the payment fee, by turning a multi-day, pre-funded process into an always-on liquidity and settlement process,” Chan said.

Businesses are also exploring stablecoins to manage cash and settle international payments, said Nischint Sanghavi, head of digital currencies for the Asia-Pacific region at Visa International (Asia-Pacific), LLC.

He said stablecoins would need to work with existing payment systems rather than create separate networks.

“Our view is that stablecoins will be most effective when they operate as part of a broader financial infrastructure rather than as isolated networks; a unified approach matters,” Sanghavi said.

Asian markets are working on shared standards, but no single set exists, Ruddenklau said.

Project Nexus, led by the Bank for International Settlements, seeks to connect domestic instant payment systems in India, Malaysia, the Philippines, Singapore, and Thailand through shared infrastructure.

But interoperability is limited due to differences in regulatory requirements for licensing, reserve management and compliance.

“At the same time, differences in blockchain networks, settlement architectures and governance frameworks may pose challenges to seamless cross-border transactions,” Ruddenklau said.

Yvonne Yiu, head of global payment solutions for Greater China at The Hongkong and Shanghai Banking Corporation Ltd. (HSBC), said making different forms of digital money work together remains the biggest challenge.

An April 2026 HSBC poll of 700 treasury and finance professionals found 44% were very or somewhat likely to use digital currencies within two years, while 39% were unlikely to do so.

Some 55% cited greater efficiency as their main reason for adoption, whilst 52% cited lower costs.

“Clients agree that tokenised deposits and other types of digital currencies can solve real-world problems,” Yiu told Asian Banking & Finance in an emailed reply to questions. “Now, it is incumbent on the industry to deliver interoperability, lest we create more digital islands.”

Naveen Mallela
Global Head of Payments
Standard Chartered

While a single global infrastructure is unlikely, a connected ecosystem of networks, settlement assets and forms of money operating under common standards is more probable. Banks will need to be at the forefront of bringing a seamless experience to the client and build interoperability and orchestration combining the trust, reach and regulatory safeguards of banking with stablecoin efficiency and programmability.

The priority is interoperability: different forms of money, infrastructures and networks must work across traditional and digital environments. As regulations, payment systems and licensing requirements vary across Asian markets, innovation is likely to scale through connected ecosystems rather than a single standardised model. Common standards and evolving legal and regulatory frameworks will support scale and adoption. Banks with local expertise and cross-border capabilities can help clients benefit without adding complexity. Banks can act as trusted bridges between traditional rails, instant-payment schemes and emerging digital infrastructure.

David Chan
Managing Director and Partner
Boston Consulting Group

The key condition for scale is interoperability. Stablecoins need to work as interoperable money, rather than becoming another collection of closed payment rails.

Institutions are tackling this in different ways. Some are using public blockchains for reach and liquidity while keeping institutional controls at the asset and execution layers, such as wallet permissions, compliance, auditability, and privacy. Others are choosing shared issuance and consortium models. Twenty-one international financial institutions recently committed to establish a stablecoin company, initially focused on USD and subsequently on additional G7 currencies, for uses including cross-border payments and digital-asset settlement.

Regulators and central banks are also part of the infrastructure story. Hong Kong’s Project Ensemble has moved into real-value transactions involving tokenised deposits and digital assets and is working toward 24/7 settlement using tokenised central-bank money. Project Agorá has demonstrated atomic multi-currency settlement using tokenised commercial-bank deposits and central-bank reserves.

Ultimately, scale will depend less on how many stablecoins are issued, and more on whether money and assets can move across an interoperable financial system.

Yvonne Yiu
Head of Global Payments Solutions, Greater China
HSBC

We know from our client conversations that the single biggest barrier to their adoption of digital currencies is the lack of interoperability. This is understandable: in a region as diverse as Asia, rules and regulations around data and digital currencies differ from market to market.

Nevertheless, waiting for a perfect future state risks missing the learning curve. Treasury and finance teams who benefit most will run contained experiments today: narrowly defined use cases, clear controls, and measurable outcomes. HSBC is actively building on our digital-currency capabilities – particularly in Hong Kong and Singapore – to help clients navigate this next chapter with confidence.

At the same time, to move more clients from the sidelines onto the playing field, the financial industry as a whole needs to deliver interoperability. And the shift is underway: in August, HSBC completed the first inter-bank tokenised deposit transaction on Swift’s blockchain-based ledger, not only demonstrating interbank interoperability, but helping advance industry progress on 24/7 cross-border payments.

Treasurers clearly see the benefits of adopting digital currencies, whether it is increasing efficiency, reducing cost, or enhancing liquidity. Meanwhile, the progress we have demonstrated shows how tokenised deposits can work across financial institutions in a way that is secure, interoperable, and designed for real-world payment flows.

Clients agree that tokenised deposits and other types of digital currencies can solve real-world problems. Now it is incumbent on the industry to deliver interoperability, lest we create more digital islands.

Nischint Sanghavi
Head of Digital Currencies
Asia Pacific, Visa

Stablecoins have moved well beyond experimentation and are increasingly being used for treasury operations, settlement, cross-border transfers and payouts. As adoption grows, the conversation has shifted from whether stablecoins have a role to play, to how they can scale in a way that is secure, interoperable and useful for businesses and financial institutions.

One of the key questions facing banks is whether stablecoins can be adopted at scale without adding further fragmentation to the payments ecosystem. Our view is that stablecoins will be most effective when they operate as part of a broader financial infrastructure rather than as isolated networks, a unified approach matters. Businesses and consumers do not want more complexity. They want money to move seamlessly, regardless of the underlying technology. That is why interoperability matters. The long-term opportunity is not creating entirely separate payment systems, but connecting stablecoin capabilities with existing payment, settlement and money movement infrastructure to enable greater efficiency and choice.

The same principle applies across Asia Pacific, where regulatory approaches continue to evolve at different speeds. We are seeing encouraging progress across a number of markets, but regulatory fragmentation remains one of the industry's biggest challenges. For stablecoins to scale across borders, institutions will need common standards, trusted infrastructure and strong compliance frameworks that can operate across jurisdictions. Success will depend not only on technology, but also on collaboration between regulators, financial institutions, payment providers and the broader ecosystem. Interoperability, trust and governance will be just as important as the underlying blockchain infrastructure itself.

Anton Ruddenklau
Partner, Head of Financial Services
KPMG in Singapore

While stablecoins have the potential to improve settlement speed and programmability, scaling them across borders will not automatically create a more integrated payments landscape. In the near term, existing fragmentation may become more pronounced as jurisdictions pursue different regulatory approaches, infrastructure models and market priorities.

Regulatory requirements for licensing, reserve management and compliance continue to diverge across markets, limiting interoperability between stablecoins issued under different regimes. At the same time, differences in blockchain networks, settlement architectures and governance frameworks may pose challenges to seamless cross-border transactions.

As a result, the key challenge is not simply scaling stablecoins, but building the interoperability, trust frameworks and cross-jurisdictional coordination needed for them to operate effectively at scale. While technologies such as cross-chain bridges can help connect networks, they do not fully address the structural sources of fragmentation.

Asian banks are yet to be able to connect stablecoin ecosystems - there are current efforts to develop shared standards, interoperable infrastructure and greater regulatory coordination. Project Nexus, a multilateral initiative that connects domestic instant payment systems to support cross-border fiat currency payments, has already demonstrated strong demand for regional connectivity through its reliance on common infrastructure and multilateral arrangements. The stablecoin version of this network is yet to materialise in part due to cost, complexity and challenges in demonstrating a clear return on investment (ROI).

As digital asset markets mature, success will depend less on any single stablecoin and more on common frameworks, interoperable networks, and clear regulatory guidance that enable trusted and compliant cross-border transactions. Initiatives that have been under proof of concept evaluation like unified ledgers, universal digital payment networks and interoperable financial market infrastructure (FMI) will likely further strengthen connectivity across jurisdictions too.