Author: @BlazingKevin_, Researcher at Movemaker
In our previous analysis, we argued that the creation of Plasma was a key strategic move for Tether, aimed at fundamentally transforming its business model from a passive "stablecoin issuer" to an active "global payment infrastructure operator" to recapture the enormous value captured by third-party public chains. The urgency and importance of this strategic deployment are being amplified by an irreversible macroeconomic trend: the real-world adoption of US dollar stablecoins is undergoing a significant paradigm shift and entering a phase of accelerated expansion.
First, from a macroeconomic data perspective, the overall size of the stablecoin market is experiencing a new round of structural growth. Compared to the market cycle two years ago, the total global stablecoin market capitalization has climbed from approximately $120 billion to $290 billion, a 140% increase. This data demonstrates that demand for stablecoins has transcended the realm of speculation and trading within the crypto-native sector and is beginning to gain broader market recognition as an independent asset class and financial instrument.
This growth is most evident in the cross-border payments vertical. Two years ago, the actual use case of stablecoins for cross-border settlements was nascent and almost negligible. However, according to the latest data, monthly settlement volume in this sector has now exceeded $60 billion. Even more noteworthy is the rate of growth—a month-over-month increase of 20% to 30%—clearly demonstrating a steep adoption curve. Despite rapid growth, market penetration remains at a very early stage. Compared to the current global traditional cross-border payments market, which stands at $200 trillion annually, stablecoins still account for a negligible share, suggesting significant potential for future growth, potentially tens or even hundreds of times greater. III. Core Driver: Demand for "Currency Alternatives" in Hyperinflationary Economies The accelerated adoption of stablecoins stems from strong real-world economic drivers, particularly evident in emerging markets and countries with high inflation. An in-depth analysis by Cointelegraph in August noted that in countries like Venezuela, the sovereign currency (the bolivar) has essentially lost its core function as a medium of exchange for daily commercial transactions due to hyperinflation. Stringent capital controls, a failing local banking system, and chaotic official exchange rates have combined to create a scorched-earth financial environment. In this environment, citizens and businesses are actively seeking alternative currencies. US dollar stablecoins, with their ample liquidity and stable value, are far more reliable than cash or local bank transfers and have become the market's natural choice of "hard currency." This phenomenon is not unique to Venezuela. Since the global inflation wave of 2022, several major economies, including Argentina, Nigeria, Turkey, and Brazil, have faced severe pressure to devalue their currencies, creating a huge demand for value storage and payment safe havens. According to Chainalysis data, Venezuela's cryptocurrency adoption rate ranks 18th globally. Even more compelling is the fact that in 2024, 47% of the country's small transactions under $10,000 were conducted using stablecoins, making it the ninth-largest crypto adopter globally on a per capita basis. This is no longer a niche activity, but rather strong evidence that stablecoins are deeply embedded in the fabric of society and the economy. More importantly, this adoption is gradually moving from the "gray area" of spontaneous grassroots initiatives to the "sunlight" of official recognition. In Brazil, stablecoins have been integrated into PIX, the national instant payment system; in Argentina, the use of stablecoins for large contract payments, such as rent, has also been legally recognized. These cases signal that stablecoin adoption is evolving from "bottom-up" initiative to a higher level of "top-up confirmation." Since the clarification of the regulatory framework, exemplified by the Genius Act, the growth trajectory of dollar-denominated stablecoins has accelerated exponentially, and their long-term potential is far from reaching its ceiling. This explosive growth is not merely a market phenomenon; it is deeply tied to the strategic interests of the United States. From a macro perspective, the global expansion of dollar-denominated stablecoins can bring at least three strategic benefits to the United States: Maintaining Dollar Hegemony: An Asymmetric Extension of Currency Influence Over the past decade, the global process of "de-dollarization" has been progressing slowly but steadily and orderly, eroding the dollar's international reserve and settlement status. The rise of dollar-denominated stablecoins offers a novel, asymmetric solution to reversing this situation. Especially in the high-inflation countries mentioned above, the widespread adoption of dollar-denominated stablecoins essentially creates a parallel, dollar-anchored "digital dollar" economy, outside the sovereign financial system. This effectively circumvents these countries' capital controls and fragile fiat currency systems, allowing the dollar's value proposition to reach end users directly. This not only avoids the use of any traditional geopolitical or military means, but also effectively achieves deep monetary penetration into these economies, greatly expanding the effective reach of the "dollar ecosystem" (traditional dollar + digital dollar), thereby consolidating the dollar's international status in a new dimension. The second strategic fulcrum is to provide support for the increasingly burdensome US government finances. This is crucial. The stability of the US Treasury market, particularly its yield level, is a core concern of US economic policy. The Trump administration's extreme sensitivity to fluctuations in 10-year Treasury bond interest rates during tariff disputes demonstrates that the Treasury bond market is the cornerstone of the US macroeconomy. The issuance mechanism of US dollar stablecoins naturally creates a large and growing source of demand for US Treasury bonds. Although stablecoin issuers currently hold a significant portion of their reserve assets in US Treasury bonds, their role as major buyers of US Treasury bonds will become increasingly significant as their total market capitalization continues to expand. Citigroup's analytical model predicts that the long-term potential size of the stablecoin market could reach $1.6 trillion by 2030. The model further indicates that hundreds of billions of dollars in incremental demand for US Treasury bonds will come primarily from three sources: 1) the reallocation of globally circulating US dollar cash to digital forms (approximately $240 billion); 2) a partial reallocation of global central bank base money (M0) (approximately $109 billion); and 3) the reallocation of foreign-held US dollar deposits to stablecoins (approximately $273 billion). This additional purchasing power will play a significant role in stabilizing US Treasury yields and reducing government financing costs.
Finally, the US is fully committed to ensuring its dominant position in the global crypto market, and US dollar stablecoins are a key tool for achieving this goal. The 180-degree shift in regulatory direction, from past suppression to current embrace, clearly reveals the evolving US strategic intent. When policymakers realized they couldn't completely stifle crypto, they quickly turned to a strategy of "coopting" and "utilizing" it, incorporating this emerging field into their regulatory and economic landscapes by establishing a comprehensive legal framework.
This strategy isn't unique to the United States; it's part of a global race among major economies. The ultimate goal of all countries and regions actively pursuing stablecoin legislation is to seize a favorable position in this new fintech landscape and share in its future dividends. By supporting dollar-denominated stablecoins, the United States aims to ensure that the underlying settlement standards for the future global digital economy remain firmly in its hands.
Despite the robust expansion of dollar-denominated stablecoins, a healthy global digital asset ecosystem should encompass the coexistence of multiple fiat currencies. However, real-world data reveals a deeply unbalanced picture: the market space for non-USD stablecoins is being severely squeezed. Data shows that this sector has experienced a dramatic decline. In 2018, at the beginning of the market's development, non-USD stablecoins held 48.98% of the market share, practically rivaling USD stablecoins (51.02%). However, today, their total market share has collapsed to just 0.18%. In terms of absolute size, the total market capitalization of non-USD stablecoins is only $526 million, of which Euro-denominated stablecoins ($456 million) hold a commanding 88.7%. This demonstrates that, aside from the US dollar, no other fiat currency has yet established effective market competitiveness in the stablecoin market.
As the stablecoin market becomes increasingly integrated with real-world economic activity, this "unipolar system" of US dollar-denominated stablecoins poses potential structural risks for users in non-USD zones (particularly developed economies experiencing similarly low inflation). The core issue is that these users are forced to bear unnecessary foreign exchange volatility risk in the process of participating in the global cryptoeconomy. We can illustrate this problem with a typical user journey: Imagine a user in Tokyo who uses Japanese Yen (JPY) to purchase Ether (ETH) on the local regulated exchange bitFlyer. When she wishes to invest these assets in global DeFi protocols (such as lending on Aave or providing liquidity on Uniswap), she discovers that the core funding pools of these major protocols are almost entirely denominated in US dollar stablecoins (USDC, USDT, etc.). Her "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 a sufficiently liquid and composable JPY stablecoin, her only option is to convert her ETH into a US dollar stablecoin. This step adds an additional layer of JPY/USD exchange rate exposure to her portfolio. Regardless of future profits or losses, when she ultimately converts her assets back into Japanese yen, she will have to bear the exchange rate fluctuations during this period, effectively incurring an invisible "exchange rate tax."
Third: Systemic Risk and the Strategic Necessity of Diversification
From a more macro perspective, the entire crypto economy's liquidity lifeline currently relies almost entirely on US dollar-denominated stablecoins, creating a potential, highly concentrated point of systemic risk. Any extreme regulation, technological failure, or monetary policy shock originating in the United States could have a catastrophic impact on global markets.
Therefore, promoting the development of multiple high-quality stablecoins, such as the euro, pound, and yen, has far greater significance than market competition itself.
It effectively builds a "risk isolation wall" and a "systemic backup plan" for the global crypto economy. A diversified, multi-fiat stablecoin ecosystem can effectively mitigate the risks associated with overreliance on a single national currency and regulatory system, enhancing the overall system's resilience. For major economies like the EU and Japan, promoting stablecoins regulated by their own financial systems and pegged to their own currencies is no longer simply a commercial undertaking; it extends the maintenance of their "monetary sovereignty in the digital age" and represents a national strategic imperative. Although non-USD stablecoins currently lag far behind USD stablecoins in terms of scale and liquidity, their existence holds a solid foundation, and their development is an inevitable historical trend. Below, we will provide a detailed overview of the development of major non-USD stablecoins.
Against the backdrop of the global stablecoin market being dominated by the US dollar, the evolution of the euro stablecoin provides us with an excellent example of how non-US dollar currencies attempt to break through under regulatory pressure.
The development of the euro stablecoin can be clearly divided into two phases, with the EU's Markets in Crypto-Assets Directive (MiCA) as the watershed:
Early Exploration Phase (Before the MiCA Act): The landmark project of this phase was STASIS Euro (EURS), launched in 2018. As a market pioneer, EURS has long faced slow growth, with its market capitalization hovering between tens of millions and 100 million euros. This reflects the lack of a clear regulatory framework and institutional demand, which limited the market to a small number of European crypto enthusiasts and prevented it from achieving scale. Accelerated Development Phase (Driven by the MiCA Act): The proposal and gradual implementation of the MiCA Act was a fundamental game-changer. It provided market participants with unprecedented legal certainty, attracting industry giants to formally enter the market. Stablecoin issuers Circle (issuer of USDC) and Tether (issuer of USDT) launched Euro Coin (EURC) and Euro Tether (EURT), respectively. Circle, in particular, began actively advancing its multi-chain deployment strategy in 2023-2024, expanding EURC to multiple mainstream public chains, including Ethereum, Solana, and Avalanche. The results of this strategic transformation are borne out by data: Between 2023 and October 2025, the total market capitalization of euro-denominated stablecoins experienced rapid growth, currently reaching $456 million. Circle's EURC contributed the vast majority of this growth, with its market capitalization increasing by 155% in 2025, from $117 million at the beginning of the year to $298 million. While the absolute value still lags significantly behind that of US dollar-denominated stablecoins, its growth rate demonstrates strong catching-up momentum. II. Market Acceptance Assessment: Infrastructure in Place, Network Effects Lacked Exchange and DeFi Integration: The euro-denominated stablecoin has already established its foundational infrastructure. All top exchanges, including Coinbase, Kraken, and Binance, have listed EURC or EURT and offer trading pairs with major crypto assets. Furthermore, leading DeFi protocols such as Aave, Uniswap, and Curve have also integrated the platform. In particular, on protocols like Curve, which are optimized for stablecoin exchange, the liquidity of the euro stablecoin pool is steadily increasing. Potential Application Scenarios: In the payment and remittance sectors, some Web3 payment applications and fintech companies have begun small-scale pilots using euro stablecoins for instant settlement within the eurozone and cross-border payments. Core Obstacle: Awareness Gap: Despite the initial infrastructure, euro stablecoins face significant awareness gaps and network effect deficits. In the minds of the vast majority of global crypto users, the concept of "stablecoin" is almost synonymous with "dollar stablecoin," making it difficult for euro-denominated stablecoins to acquire new users and maintain liquidity.
Potential Competition from Official Digital Euros (CBDCs): The European Central Bank (ECB) is actively promoting the research and development of a digital euro. Once a central bank-issued, credit-risk-free digital euro is launched, it will pose direct, asymmetric competition to privately issued euro-denominated stablecoins. At that point, the digital euro is likely to gain an overwhelming advantage in regulatory status and application scenarios, squeezing out private stablecoins.
Business Model Challenges Brought About by Interest Rate Differences: This presents a more fundamental economic constraint. Stablecoin issuers' core profits come from interest income on their reserve assets (primarily short-term government bonds). Historically, interest rates in the Eurozone have been consistently lower than those in the United States. This means that, given the same scale, issuing a Euro-denominated stablecoin is inherently less profitable than issuing a US-dollar stablecoin. This profitability differential directly limits issuers' ability to promote DeFi protocol integration and user adoption through revenue sharing and liquidity incentives, creating a negative cycle that hinders their initial launch and scale. The Australian dollar stablecoin market exhibits a distinct development paradigm from that of the Eurozone. Although its total public market capitalization is approximately $20 million, ranking second among global non-US dollar stablecoins, its most notable characteristic is its top-down exploration, led by traditional banking institutions rather than crypto-native companies.
Australia's most notable stablecoin projects originate from two of the country's "Big Four" banks—ANZ and NAB—who have launched A$DC and AUDN, respectively. This phenomenon is extremely rare globally, signaling a direct recognition by the mainstream financial system of the potential value of stablecoin technology. However, it is worth noting that these two bank-issued stablecoins are currently primarily in the inter-institutional settlement and internal pilot phases and have not yet been widely released to the public.
The supply of Australian dollar stablecoins for the retail and crypto trading markets is primarily provided by third-party payment companies, with AUDD being a prominent example. AUDD (by Novatti) Issuer Background: Novatti is a licensed payment service provider listed on the Australian Securities Exchange (ASX) with a background in both compliance and fintech. Target Customers: AUDD is clearly positioned to serve three primary user groups: cryptocurrency traders, individuals or businesses with cross-border Australian dollar remittance needs, and Web3 application developers. Technical Path: AUDD chose to issue on public blockchains known for their efficient payments, such as Stellar, Ripple, and Algorand, rather than Ethereum, reflecting its strategic focus on payments and settlement. Market Position: Currently, AUDD is the most accessible and usable Australian dollar stablecoin for retail users. II. Core Development Dilemma: The Dual Uncertainties of Regulation and Official CBDCs Lack of Regulatory Framework: Unlike the EU, which has fully implemented the MiCA Act, Australia has yet to introduce a comprehensive and clear legal framework for stablecoins as of October 2025. This regulatory lag poses the greatest bottleneck to market development. Even strong banks like ANZ and NAB can only conduct exploration on a small scale, unable to promote products to the public on a large scale amidst the lack of clear regulatory definitions. This significantly limits the speed and scale of development of the entire Australian dollar stablecoin ecosystem. Potential Competition from Official Digital Australian Dollars (CBDCs): The Reserve Bank of Australia (RBA) has actively researched the issuance of an official CBDC and recently successfully completed a pilot program. This development introduces a second level of uncertainty into the market. If the RBA decides to formally issue a digital Australian dollar, as an "ultimate risk-free asset" directly held by the central bank and free of credit risk, it will directly compete with stablecoins issued by commercial banks or private institutions. Whether the two will coexist in a complementary manner or compete in a substitutional manner remains unclear in the long term. The Korean Won Stablecoin: The South Korean market presents a unique paradox: despite being a country highly receptive to crypto assets, it lacks the necessary fertile ground for stablecoins. This is in stark contrast to the bottom-up adoption driven by the private sector in high-inflation countries. The fundamental reason is that South Korea's highly developed FinTech and instant payment systems already meet the daily needs of the vast majority of users, thereby weakening the inherent motivation for stablecoins as a payment alternative. Therefore, the only viable path for a Korean won stablecoin to gain market adoption is a top-down, strategic push led by large institutions. This could include the following scenarios: Led by the government or tech giants like Naver and Kakao, seamlessly integrating it into existing payment or remittance backends. Driven by mainstream exchanges, with the Korean won stablecoin replacing the physical won as the core transaction medium.
Platforms can launch innovative incentives or micropayment functions based on stablecoins.
However, before these scenarios can be realized, the market faces a series of deep structural obstacles.
The most significant bottleneck currently is the severe legislative delay. Although the South Korean National Assembly has a backlog of five relevant bills, legislative progress is extremely slow. According to the current forecast (October 2025), even if the Financial Services Commission (FSC) can submit the government's proposal on time, the relevant laws will not officially take effect until early 2027 at the earliest. Before then, no company will be able to legally and scalably conduct stablecoin business within the legal framework. This regulatory uncertainty has directly led to a divided and generally cautious attitude within the Korean business community: Small businesses have shown a willingness to participate, but their activities are primarily driven by public relations and market influence, and they generally lack the capital, compliance, and technical capabilities required to operate stablecoin businesses at scale. Large corporations (chaebols) have generally adopted an extremely cautious "wait-and-see" strategy. Their core considerations are twofold: first, the legal risks are too high; second, they assess that the tangible commercial returns from turning to blockchain technology in the highly inward-looking domestic market are not yet sufficient to attract the substantial investment of resources. Currently, all activities surrounding the Korean won stablecoin remain largely at the superficial stage of theoretical discussion and trademark applications.
In summary, the difficulties facing the Korean won stablecoin can be attributed to four interrelated structural obstacles:
Technical Path: Private vs. Public Chain Regulators such as the Bank of Korea and the FSC, primarily concerned with risk control, strongly favor the initial issuance of the stablecoin on a "customized Korean private chain." However, this concept has been widely considered disappointing by the industry. It not only violates the core values of blockchain—openness, permissionlessness, and interoperability—but also risks further fragmenting the Korean financial system into multiple, disconnected private networks, creating inefficient "walled gardens." The dual constraints of the reserve asset market: scarcity and low yields. The business model of stablecoins is fundamentally based on reserve assets. South Korea faces a dual challenge here: First, its domestic financial market lacks short-term government bonds with maturities under one year, making it deprived of the ideal and safest reserve asset class for stablecoins. Second, even for alternative assets like currency-stable bonds, the market size and liquidity are insufficient to support large-scale stablecoin issuance. More critically, the yield of the South Korean bond market, approximately 2%, is far lower than the approximately 4% in the United States. This significantly weakens the profit incentive for issuers operating stablecoin businesses, making them commercially unattractive. A technical misunderstanding of public chain regulation: The widely held view among the South Korean government that public chains are too risky and difficult to regulate is, to a certain extent, a misunderstanding of existing technology. In fact, through well-designed smart contracts, effective oversight and compliance control of user identity authentication (KYC) and capital flows can be achieved on an open public blockchain. A Collective Lack of Vision and Sense of Urgency: The fundamental problem lies in the fact that no key stakeholders, from the government to financial institutions to large enterprises, have articulated a clear goal or concrete plan for the future of the Korean won stablecoin. The entire market has fallen into a strategic stagnation of "collective waiting." However, the evolution of global blockchain finance won't wait for latecomers. If South Korea waits until 2027 to launch its stablecoin on a closed private blockchain, it will find itself far behind the world. Hong Kong Dollar Stablecoin: Hong Kong's stablecoin development path presents a complex landscape characterized by a three-way balancing act between clear local regulations, active market participation, and prudent regulatory oversight from mainland China. Hong Kong is currently at a critical turning point. After experiencing initial overheating, the market is entering a new phase of "localized cooling" and structural differentiation. Despite market volatility, Hong Kong's official stance remains firm. Secretary for Finance and the Treasury, Christopher Hui, has publicly stated that applications for compliant stablecoin licenses are proceeding according to the established framework, and the first batch of licenses is expected to be issued in early 2026, as planned. I. Hong Kong's Proactive Layout and Initial Market Overheating Hong Kong's strategic goal of becoming a leading global virtual asset center is clear. To this end, the Hong Kong government has implemented a series of proactive and well-paced measures: March 2024: Launch of the "Sandbox" for stablecoin issuers, providing the market with a regulated testing environment. August 1, 2025: The Stablecoin Regulations officially came into effect, establishing the world's first comprehensive and clear regulatory framework for stablecoins. This leading regulatory certainty significantly stimulated market enthusiasm, attracting over 77 companies to express their intention to apply, causing the sector to appear overheated. However, the overwhelming rush of Chinese-backed financial institutions to participate has drawn the cautious attention of mainland regulators.
The core concern of the recent "window guidance" provided by mainland regulators to relevant Chinese institutions is not to stifle innovation, but is based on the following considerations:
Risk Isolation: Ensuring that potential risks in Hong Kong's virtual asset businesses are not transmitted back to the mainland's large and strictly regulated parent financial system through equity relationships.
Capital Control: Strictly preventing mainland funds from flowing into Hong Kong's virtual asset market through non-compliant channels.
Market Order: Requires Chinese institutions to maintain a low profile and avoid excessive publicity or creating public opinion hotspots to prevent irrational market overheating. This tension between "Hong Kong's global ambitions" and "mainland China's financial prudence" is the core context for understanding the current dynamics of the Hong Kong dollar stablecoin market. III. Market Status: Localized Cooling, Expected Slowdown, and Structural Divergence The intervention of mainland regulators has had an immediate impact on the market, which can be summarized as follows: The first wave of withdrawals has emerged: Before the official application deadline of September 30, at least four Chinese-backed financial institutions, including Guotai Junan International, publicly announced their withdrawal from stablecoin license applications or suspended their RWA-related business. The market expects that some previously active Chinese banks (such as Bank of China (Hong Kong)) may also postpone their applications.
Strategy shifts to "do, don't say": Mainland regulatory guidance doesn't entail a blanket ban, but rather a requirement to "maintain a low profile." This has forced Chinese institutions to shift their strategy from their earlier high-profile forays to a more cautious internal research and quiet deployment.
Divergent market structure: This round of "cooling" is localized and asymmetric. Affected entities are highly concentrated among Chinese-backed institutions. Meanwhile, Hong Kong and other international financial institutions continue to advance their virtual asset businesses in an orderly manner within the existing legal framework. Expected Licensing Pace: The market generally expects the first round of license issuance to follow a cautious pace similar to that of VASP exchange licenses, with only a very small number (possibly only one or two) issued by the end of 2025 or early 2026, followed by a gradual relaxation of restrictions based on market development. Fourth, the Strategic Dilemma Facing the Hong Kong Dollar Stablecoin: Uncertainty Under the Influence of Mainland Regulation: This is the core dilemma at present. Chinese institutions are an indispensable component of Hong Kong's financial market. Their collective "holding back" or "low-key" approach will undoubtedly affect the market size, liquidity depth, and breadth of application scenarios of the Hong Kong dollar stablecoin in its initial launch. Hong Kong authorities need to strike a delicate balance between promoting market openness and addressing the concerns of mainland regulators. The contradiction between the pace of development and global competition: Compared to the "all-out heating up" of the US market, Hong Kong, influenced by mainland China, has adopted a more restrained and cautious development pace. While this steady pace helps control risks, it also puts it at risk of missing the window of opportunity and falling behind competitors in the global race for financial innovation. The trade-off between risks and rewards: Mainland regulatory intervention has essentially forced Chinese institutions to reassess the risk-reward balance of being "first entrants." While pioneers enjoy the greatest policy dividends and first-mover advantages, they also bear the heaviest market and compliance trial-and-error costs. Japanese Yen Stablecoin: Japan's stablecoin development path is a top-down, carefully designed financial infrastructure innovation by the government within its unique macroeconomic context. Its core driving force isn't private speculative demand, but rather the urgent need to address the country's long-standing structural economic challenges, including low interest rates, slow growth, and deflationary pressures. Stablecoins are held in high regard, seen as a policy tool that can improve financial efficiency, revitalize capital flows, and inject new impetus into a weakened domestic payment system and illiquid government bond markets. To this end, the Japanese government has established what is arguably the world's most rigorous regulatory framework for stablecoins through a series of legislation, including the Revised Funding and Debt Law. Its strategic intent is crystal clear: to transform stablecoins from mere "cryptoassets" into "financial infrastructure" serving national strategy. I. From Theory to Practice: The Launch of the First Compliant Product Currently, Japan's stablecoin market has officially transitioned from the "theoretical preparation phase" to the "commercial implementation phase." Landmark Event: Fintech startup JPYC Inc. has received regulatory approval to issue the first fully compliant Japanese yen stablecoin, "JPYC," in the fall of 2025. Key Partnership: This issuance reveals Japan's market entry model—"technological innovation from a startup (JPYC Inc.) combined with the compliance infrastructure of a major platform (Mitsubishi UFJ Trust and Banking Corporation's Progmat Coin)." This demonstrates that regulators are open to innovation, but only if it is anchored within the strong compliance framework of licensed financial institutions. Technical Path and Business Ambitions: JPYC plans to issue on multiple mainstream public blockchains, including Ethereum and Avalanche, demonstrating its commitment to openness and composability while adhering to regulatory compliance. Its goal of issuing 1 trillion yen within three years, as well as its Series A investment from international giants such as Circle, demonstrates its resolve to seize market share. JPYC is not positioned to replace fiat currency, but rather as the "on-chain yen," serving as a bridge that seamlessly extends the functionality and value of the yen to the global digital economy.
International Remittances and Corporate Settlements: Provides near real-time, 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 a "native liquidity carrier" denominated in Japanese yen, it provides a stable value medium for Japan's large number of Web3 applications such as games and NFTs, building their underlying financial infrastructure.
The launch of the Japanese yen stablecoin reflects Japan's multi-layered strategic considerations:
Defensive Strategy: Striving for Digital Currency SovereigntyThis is the core initiative. By launching a compliant Japanese yen stablecoin, Japan aims to break the monopoly of US dollar stablecoins in the digital world, providing a non-dollar option for cross-border trade and international settlements, and thus reducing its reliance on traditional systems like SWIFT.
Economic Strategy: Activating the Treasury Bond Market and Innovating Monetary Policy ToolsThis is a brilliant design that kills two birds with one stone. By requiring a large allocation of reserve assets to Japanese Government Bonds (JGBs), not only will a new, structural buyer be created for the long-suffering government bond market, helping to lower the government's financing costs, but in the more distant future, the central bank may even adjust the reserve requirements of stablecoins, using them as a new monetary policy tool to regulate market liquidity.
Developmental Strategy: Promoting Financial Infrastructure UpgradesThe approval of JPYC will have a "catfish effect" within Japan's conservative financial system, activating the innovative vitality of local giants like Sony and Mizuho, promoting the modernization of the domestic payment system, and securely connecting Japan's financial system to the global Web3 ecosystem in a highly compliant manner, preventing it from being left behind in the next wave of digital finance.
Business Model Challenges: In a zero-interest rate environment, the traditional profit model relying on interest on reserve assets is completely ineffective. This requires issuers to quickly achieve a massive issuance scale and maintain operations through economies of scale through "small profits but quick turnover."
Extreme Risk Control Framework:
Legal Characterization: Stablecoins are strictly defined as "electronic payment instruments," fundamentally stripping away their speculative nature.
Entity Restrictions: Issuers are limited to licensed financial institutions such as banks and trust companies.
Unique "Asset Top-up Clause": Issuers are required to cover the shortfall with their own capital in the event of a depreciation of their reserve assets. This strong constraint, unseen in European and American regulatory frameworks, significantly safeguards user asset security.
Mandatory Anti-Money Laundering/KYC Screening.
In summary, the "trust-based," "strongly regulated," and "semi-centralized" stablecoin model pioneered by Japan achieves the ultimate in security and compliance. It provides a valuable reference for other Asian economies like Hong Kong and South Korea, which also prioritize financial stability, and has the potential to lead the entire East Asian region in forging a new regulatory consensus on the path of "compliant stablecoins."
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