Are Asia’s digital banks prepared for the stablecoin era?

Whilst the first digital banking focused on domestic use, the next phase will cater to customers whose financial lives are cross-border.

More than a decade after the first stablecoin was launched, the asset is entering a new phase – one shaped by something cryptocurrencies have long promised but not necessarily fully realised: Utility at scale, driven by real-world adoption.

Amidst recurrent volatility in cryptocurrency markets, stablecoins were designed to offer the opposite. Designed to maintain a steady value, stablecoins are pegged to underlying assets – typically fiat currencies such as the US dollar – and supported by reserves intended to maintain their value.

By the end of 2025, total on-chain stablecoin transaction volumes reached an estimated US$33t ($41t), reflecting growing usage across digital asset markets and emerging real-world applications. Whilst a significant share of this activity continues to be linked to trading and other digital-asset transactions, the use of stablecoins for payments and settlement is also gaining attention.

This growth has coincided with increasing regulatory momentum in the United States, following the passage of the GENIUS Act, in July 2025. The Act established a regulatory framework for payment of stablecoins, including requirements relating to reserves, redemption, supervision and compliance, whilst continuing to support US dollar-backed stablecoin innovation.

Today, 98% of stablecoins in circulation are pegged to the value of the US dollar, yet over 80% of transaction activity takes place outside the United States, with Asia accounting for approximately 60% of payment volumes.

Asia’s proclivity in stablecoin use is perhaps unsurprising given that the continent has some of the world’s most advanced domestic payments rails, many of which now support real-time transactions. From India’s UPI to Singapore’s PayNow, digital payments adoption has proliferated across the continent and has shaped user expectations that money should move instantly, seamlessly, and at a low cost.

Despite the significant progress we’ve seen in domestic payments today, cross-border payments in Asia – and much of the world – remain somewhat fragmented.

To be clear, meaningful strides have been made to enhance cross-border payment capabilities across the region. In 2021, the linkage between Singapore’s PayNow and Thailand’s PromptPay became the world’s first connection between two national real-time retail payment systems. More recently, cross-border QR payment linkages, such as the integration of China’s Alipay+ with Indonesia’s QRIS, have enabled travelers to pay using domestic apps and in their home currencies all whilst expanding mobile wallet acceptance across the region.

These are important building blocks in a region that includes several of the world’s largest remittance-receiving markets. But a connected corridor doesn’t necessarily make for a connected region. Many of these linkages remain corridor specific, and oftentimes, are dependent on participating banks, wallets, and platforms; they still do not amount to a unified cross-border payments layer for Asia.

Whether it’s a foreign worker sending money home, an SME paying a supplier, or a business managing treasury across markets, these users still face multiple intermediaries, inconsistent foreign exchange spreads, compliance checks, and settlement delays, resulting in an experience that remains very different from the speed of digital commerce that we see today.

This is where stablecoins can play a role, as they are able to move value across borders almost immediately and on a 24/7 basis, potentially reducing the number of intermediaries and reliance on traditional correspondent banking networks that have historically made cross-border payments slower and more costly.

Digitally native banks are well-positioned to capitalise on this opportunity. Some digital banking players have already launched in-app crypto trading on their respective platforms, showing that it’s not inconceivable for regulated digital banking platforms to bring digital assets into trusted, mass-market user environments.

Beyond that, many digital banks were established to improve access for customer segments underserved by traditional delivery models. These banks radically changed the experience of everyday financial services by bringing them directly to users themselves through ecosystem and mobile-driven access, data-led underwriting, and alternative approaches to assessing risk.

Whilst the first wave of digital banking innovation focused on domestic use cases, the next phase will need to better cater to customers and businesses whose financial lives are only becoming increasingly cross-border by nature. In that sense, stablecoins will only become useful when they are connected to the banking infrastructure that customers already trust.

This means that banks and regulated payment providers will continue to play an important role in the first and last mile of many transactions whilst complying with local regulations. For the end user, the test is simple: Whether funds arrive on time, in the right account or wallet, in the right currency, with transparent fees and the safeguards expected of a trusted bank.

This poses very real infrastructural considerations. Banks need digitally-native infrastructure around their core that can process and validate real-time transactions, connect with multiple payment and technology partners, manage foreign exchange, and reconcile funds quickly as they move from point A to point B.

Ultimately, the success of these systems in the real world will depend on getting the basics right.

As banks look to explore new business models such as embedded finance, the same principles apply: The need for digitally-enabled data capabilities to safely and securely connect with the underlying fiat as well as digital asset infrastructure behind the scenes. This requires an incremental approach to innovation that allows new capabilities to co-exist with existing foundations that power reliable banking experiences consumers have grown to trust.

This is especially important in Asia, where scale and fragmentation exist side by side. Regulatory regimes vary from market to market in scope, depth, and maturity, whilst liquidity and payout systems operate on different schedules. Stablecoins may help to simplify part of the process, but they will still need to operate within local banking and payment systems, bringing them together, rather than replacing them outright in the near future.

As we’ve seen, the answer is rarely as simple as choosing between the incumbent and the challenger. 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.