Prepare for deposit outflows - Why Asian banks are focusing on stablecoins: Asia Morning Briefing | CoinDesk JAPAN

• Asian banks are introducing stablecoins to prevent deposit outflows and strengthen cross-border financial transactions.
• Major banks in South Korea, Japan, and Hong Kong are considering the introduction of a stablecoin backed by their own currencies, aiming to improve trade finance and move away from traditional banking.

In the United States, the passage of the Genius Bill in the Senate and Circle's large-scale IPO have made stablecoin-related news lively. Meanwhile, in Asia, while there are still many behind-the-scenes movements, strategic developments surrounding stablecoins are underway, aiming to change the structure of cross-border finance in the region.

Asian banks are increasingly viewing stablecoins as a defensive measure against deposit outflows and declines in trading revenue. In fact, stablecoins are already playing an important role in Asia's financial infrastructure.

Amy Zhang, the Asia Head of Fireblocks, stated in a recent interview with CoinDesk that major banks in South Korea, Japan, and Hong Kong are actively considering stablecoins linked to their local currencies to counter such threats.

"If you are not trading with Circle or Tether, you might lose your deposits. This poses a significant risk for banks," said Mr. Chan.

In South Korea, eight major banks, including KB Kookmin Bank and SBJ Bank, have established a consortium aiming to issue a Korean won-denominated stablecoin by 2026. This is a direct response to the rapid increase in the use of USDT and USDC in cross-border transactions.

In Japan, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank are aiming to issue Japanese yen-denominated stablecoins to enhance the efficiency of trade finance and cross-border payments. Hong Kong's Dong-A Bank recently commenced trial operations of a payment network for USD-denominated and HKD-denominated stablecoins.

Payment service providers (PSPs) are actively promoting the adoption of stablecoins, accelerating the shift away from costly traditional banking infrastructure.

"A year ago, PSP was asking us whether to implement stablecoins," said Mr. Chan.

"Now we say, 'The customer's trading volume has reached 1 billion dollars. A great wallet is needed.'"

Last year, Fireblocks, which handled over $3 trillion (approximately 430 trillion yen, based on an exchange rate of 144 yen per dollar), stated that stablecoins now account for about half of the trading volume.

Mr. Chan also pointed out the expansion of stablecoin usage in major Asian e-commerce.

According to recent reports, China's JD.com is utilizing stablecoins to significantly reduce payment costs to suppliers. Mr. Chan also mentioned this initiative.

Tazapay, a PSP in Hong Kong, utilizes Circle's USDC to facilitate cross-border payments in US dollars and Hong Kong dollars, enabling instant payments to content creators and gamers in emerging markets in Asia.

According to Visa Analytics, the trading volume of stablecoins has increased by 30% this weekend, indicating an expansion of their role in retail and the gig economy.

Mr. Chan stated that Tether's USDT accounts for a large portion of stablecoin transactions in emerging markets in Asia, backed by its liquidity and ease of access. On the other hand, USDC is being adopted in financial hubs with strict regulations, such as Singapore and Hong Kong.

As Asian financial institutions defensively adopt stablecoins and corporate users pragmatically utilize them, the transformative changes in Asia's cross-border financial infrastructure may become the next topic of discussion in the evolution of stablecoins.

Where will the next IPO that takes advantage of these movements be?

| Translation & Editing: CoinDesk JAPAN Editorial Team | Image: Circle's Jeremy Allaire CEO (CoinDesk JAPAN) |Original Text: Asia Morning Briefing: Asia’s Banks Look to Stablecoins to Prevent Deposit Flight