Many Asian nations, including Singapore, Japan, and South Korea, are developing stablecoin systems to streamline cross-border payments and settlements.
For decades, the United States has embraced its place as the world’s leading reserve currency, controlling the infrastructure that the global financial system runs on. The Society for Worldwide Interbank Financial Telecommunications (SWIFT), the Clearing House Interbank Payments System (CHIPS), dollar-clearing banks, and treasury markets have formed a system that secures the dollar’s position in global finance.
However, across the Asia Pacific (APAC) region, countries are moving faster than any region in the world to regulate, issue, and adopt stablecoins. In doing so, they are building an alternative financial architecture that could challenge US dollar dominance. Governments are treating stablecoins as a way to modernize payments, reduce reliance on slow and expensive banking networks, and create currency options that don’t depend on US intermediaries.
This geopolitical shift could mean that the dollar is becoming optional in parts of the global financial system where it was once inevitable.
SWIFT, the System APAC, Is Challenging
At the center of the global finance architecture is SWIFT, the Belgium-based messaging network used by more than 11,000 banks across 200 countries. SWIFT does not move money; it sends the instructions that tell correspondent banks how to move it. Because most international transfers clear through US banks, the system gives the United States influence over global flows. With CHIPS and Fedwire (US dollar clearing systems) and the treasury market that underpins global collateral, SWIFT forms the foundation of dollar-based settlements.
It is this architecture, not the dollar itself, that Asia’s stablecoin frameworks are challenging. By creating instant and programmable settlements using stablecoin rails, APAC economies are reducing their dependence on the legacy system that has reinforced US financial power.
Japan and Singapore: Settlement Architecture
In 2023, Japan passed one of the world’s earliest stablecoin laws, allowing licensed banks and trust companies to issue fully backed digital yen. This year, JPY Coin (JPYC) went live. It is the first legally recognized yen stablecoin backed 1:1 by bank deposits and Japanese government bonds. It is designed to lower the cost of cross-border commerce for Japanese businesses, enable faster business-to-business (B2B) payments, and reduce friction in Asia’s interconnected supply chain.
Singapore has gone even further. The Monetary Authority of Singapore established one of the world’s most advanced stablecoin frameworks, requiring full reserves, segregated assets, and annual audits. Its borderless, liquid, open, online, multi-currency (BLOOM) initiative is exploring settlement using tokenized bank liabilities and regulated stablecoins. Few governments anywhere have moved this quickly.
South Korea, Hong Kong, and Australia: Institutionalizing Stablecoins
South Korea’s ruling party launched a Digital Asset Task Force, moving from exploration to the deployment of stablecoins. Two won-pegged stablecoins—KRWQ and KRW1—have entered the market. The government encouraged the development of a domestic won-stablecoin ecosystem to reduce reliance on dollar-based stablecoins and strengthen financial sovereignty.
But the regulatory landscape is complex. The ruling party wants to pass legislation to formalize oversight of the stablecoins, but different agencies disagree over jurisdiction. The Bank of Korea warns that widespread private stablecoin issuance could undermine monetary policy and increase the risk of depegging. The bank urges traditional banks to take the lead instead.
In the meantime, Hong Kong is positioning itself as Asia’s stablecoin licensing hub. Hong Kong instituted a new stablecoin ordinance licensing regime for stablecoin issuers, establishing a formal regulatory framework for entities that issue or offer fiat-referenced stablecoins in the region. Stablecoin issuers are required to have authorization from the Hong Kong Monetary Authority, with strict consumer protection and anti-money laundering (AML) controls.
Australia is advancing in parallel. The Australian Treasury is finalizing stablecoin legislation, and its major banks have already piloted Australian dollar (AUD)- backed stablecoins for institutional settlement. The country is moving toward a regulated, bank-integrated stablecoin model that could scale quickly across Oceania and Southeast Asia.
China’s Global Interest in Stablecoins
While Beijing banned domestic crypto trading in 2021, it is increasingly interested in yuan-backed stablecoins for cross-border settlement with Belt and Road countries, where the yuan is already gaining traction. Several Chinese academics, think tanks, and tech giants publicly encouraged the exploration of offshore yuan stablecoins as a complement to the digital renminbi (e-CNY). If Hong Kong becomes the point of issuance for an offshore yuan stablecoin, it could accelerate the internationalization of the yuan and its role in trade settlement without jeopardizing Beijing’s domestic capital controls.
This is not a move towards ideological dedollarization. Asian governments are not trying to overthrow the dollar. Most continue to see it as a vital reserve asset and stabilizing force. What they are trying to do is reduce the frictions of depending on dollar-based infrastructure.
There Are Three Core Motives for an APAC Stablecoin Ecosystem
Cross-border payments in Asia pass through multiple intermediaries, each adding compliance checks and delays. A standard remittance can take between one and three business days to settle. Sanctions, compliance rules, and liquidity all flow through US-regulated choke points, which can be slow, expensive, and politically sensitive. Stablecoins dismantle this chain. A yen, Singapore dollar (SGD), or AUD-backed stablecoin settles instantly, with fewer intermediaries and fewer geopolitical roadblocks.
Stablecoins also create a new pool of safe, liquid collateral. Today, the dollar’s dominance is reinforced because global markets rely on US Treasuries, but fully reserved stablecoins backed by yen bonds or even Australian government securities can broaden the usable collateral beyond US markets.
A currency that settles instantly and is programmable becomes more attractive than one that moves only during business hours through legacy systems. APAC’s stablecoin ecosystem offers something unprecedented that the traditional dollar system does not: a technologically superior user experience accessible at any time. This dollar optional finance alone alters the structure of global power.
What This Means for the US Dollar
Unlike western economies, where US dollar (USD) stablecoins dominate almost entirely, APAC is building a multicurrency stablecoin ecosystem: Japan’s JPYC; Singapore’s SGD stablecoins; Hong Kong’s HKD; South Korea’s KRW stablecoins; Australia’s AUD stablecoins; and China’s exploration of offshore yuan-pegged stablecoins. In such a system, regional currencies become more usable, liquid, and interoperable in global commerce. The dollar doesn’t vanish, but it loses its default status.
The question for the United States, then, is not whether the dollar will remain important. The question is whether it will remain central in a world where the rails themselves are changing. Reserve currency dominance has always depended on network effects: settlement, collateral, and liquidity networks. APAC is building competing networks, and once new networks exist, money flows toward the path of least resistance.
About the Author: Emily Vartuhi
Emily Vartuhi is a Young Voices contributor based in Washington, DC. She is a graduate of the Columbia University Graduate School of Journalism MS program. Emily writes on the emerging technologies sector, such as digital asset policy, blockchain, AI, and tech use-cases for public good.
Image: tadamichi/shutterstock
