Japan and Korea Lead Asia’s Shift Toward Local Stablecoins: The New Financial Frontier

Asia's financial landscape is pivoting—hard. Forget waiting for global crypto giants to set the rules. Tokyo and Seoul are now drafting their own playbooks, launching sovereign-backed stablecoins that could reshape regional trade, payments, and digital asset markets.

The Local Play

Why the sudden sprint? National control. By issuing digital currencies pegged to the yen and won, regulators aim to cut dependence on offshore stablecoins like USDT. It's a direct move to keep capital flows, monetary policy, and transaction data within domestic oversight—bypassing the volatility and compliance gray zones of global crypto.

Regulators Take the Wheel

Japan's FSA and Korea's FSC aren't just watching from the sidelines. They're fast-tracking licensing frameworks, setting reserve requirements, and mandating real-time audit trails. The goal? Stability without the usual crypto chaos. One Tokyo-based fintech exec put it bluntly: 'This isn't DeFi summer—it's regulatory winter with a central bank seal of approval.'

What It Means for Traders

Expect smoother fiat on-ramps, lower forex fees for cross-border deals, and new arbitrage opportunities between local and global stablecoin pairs. But watch for capital controls dressed as 'compliance features.' These digital yen and won won't flow freely overseas—governments still love their financial fences.

The Bigger Picture

This shift signals a deeper trend: Asia isn't adopting crypto—it's remaking it. By embedding stablecoins into national payment infrastructures, Japan and Korea could create a template for other economies eyeing digital sovereignty. The irony? Banks that spent years dismissing crypto now scramble to issue the stuff—nothing like a little disruption to focus the mind.

One cynical take from a veteran fund manager: 'They'll call it innovation, but it's just old-school monetary policy with a blockchain wrapper. Still, if it keeps the suits from banning real crypto, we'll take it.'

The race for Asia's digital financial future just got local. And the old guard is finally learning to code.

TLDR

• Japan’s JPYC became the first legally approved yen stablecoin in 2025.

• Korea’s KRW1 launched on Avalanche and KRWQ on Coinbase’s Base chain.

• USD-backed stablecoins still made up 97% of the $312B global market.

• Japan’s top banks joined stablecoin pilots supported by regulators.

Japan and South Korea played key roles in the development of non-U.S. dollar stablecoins in 2025. Their progress marked a shift in Asia’s digital asset strategy, aiming to diversify from dollar-denominated stablecoins. While dollar-backed tokens still dominate global markets, these countries made progress in building local stablecoin frameworks through government and private initiatives.

TRM Labs’ Angela Ang stated, “Policymakers are encouraging local currency stablecoin issuance to ensure their domestic financial systems aren’t left behind.” These developments reflect early-stage efforts to adjust to an on-chain financial structure.

Regulatory Support and Bank Participation Fuel Japan’s Yen Stablecoin Growth

In Japan, 2025 saw a major step when fintech firm JPYC launched the first legally recognized yen-backed stablecoin. The product aimed to serve both domestic and international use cases. At the same time, Japan’s three largest banks — MUFG, SMBC, and Mizuho — began stablecoin and tokenized deposit pilots. These included payment testing, interbank settlements, and service integration.

Japan’s Financial Services Agency publicly supported these pilot programs in December. Financial services firm SBI Holdings also announced a partnership with blockchain firm Startale to build yen-denominated stablecoin infrastructure.

Tim SUN of HashKey Group noted, “Japan has watched the yen weaken for years… A yen stablecoin gives Japan a chance to rebuild the yen’s role in a digital-first economy.”

Korea Expands Stablecoin Use Across Multiple Networks

South Korea also made progress in non-USD stablecoin issuance. In September 2025, BDACS launched the KRW1 stablecoin on the Avalanche network, targeting global remittance and payment markets. A second won-pegged stablecoin, KRWQ, was introduced on Coinbase’s Base chain in October. Both projects demonstrated the interest in multi-chain strategies for stablecoin distribution.

KakaoBank pushed its stablecoin project forward as well, reaching the development phase. While South Korea has yet to finalize a regulatory framework for stablecoins, officials indicated that guidelines are in progress.

Stablecoins featured prominently in Korea’s 2025 crypto policy discussions, with regulators reviewing market risks and system safeguards.

Real-World Use and Market Share Remain Small

Despite the efforts in Japan and Korea, dollar-backed stablecoins continue to dominate the global market. According to CoinGecko, out of a $312 billion total stablecoin market, U.S. dollar-backed tokens account for over $303 billion, more than 97%. Yen-backed tokens make up just $16.4 million.

Experts say the current stage is more about infrastructure and positioning than immediate volume. “Less than a year of market activity isn’t enough to gauge real adoption,” said Ang of TRM Labs.

EX.IO CEO Chen Wu remarked,

“Most non-USD stablecoins launched in Asia don’t matter — because their underlying currencies don’t matter in global trade.”

Focus Shifts Toward Payments and Trade Use Cases

According to OSL Research’s Eddie Xin, non-USD stablecoins are increasingly being developed for use in payments, cross-border remittances, and trade settlement. Xin named JPYC, KRW1, and offshore yuan stablecoin AxCNH as projects designed for enterprise and regional payment flows.

He also cited Southeast Asia’s XSGD and PHPC as examples of stablecoins being used in online income and remittance systems. These instruments aim to diversify global stablecoin structures and support regional trade needs.

Xin said that 2026 could see the formation of a multi-currency stablecoin corridor across Northeast and Southeast Asia. This corridor WOULD support stablecoins based on local currencies without trying to replace the U.S. dollar.