Introduction to Asian Stablecoins
The concept of stablecoins has been gaining traction in recent years, with many experts believing that a single digital currency will dominate global payments and trade. However, this idea may not be entirely accurate, especially when considering the economic realities in Asia. In this article, we will explore the myth of dollar dominance and how Asian stablecoins are changing the landscape.
The following is a guest contribution and an opinion of Dr. Jae S. Jeong, Co-founder and CTO, Gurufin. Today’s stablecoins are an expansion of the US financial system, supported by the US dollar, and are indirectly responsible for its political goals. This loyalty is useful for some, but not all.
The Shadow of the Dollar
A closer look at the economic realities in Asia indicates that a completely different future is taking shape: a future not driven by global ambitions, but by the practical, urgent needs of the local economy. The different needs of Asian nations will promote a number of stablecoins of local currency, and central bankers will enable themselves to secure their financial systems against a digital financial system.
Currently, the digital asset ecosystem is occupied in the shadow of the dollar, with USD-pegged stablecoins such as USDT and USDC dominating the trading volume and acting as a digital gate to the crypto markets. However, there are those that emerge under the shadow of the dollar, including non-US companies and governments that still have government bonds, but the evaluation of their risk has changed.
Stablecoin Pluralism
Estimating Asian economies can use the desire for stablecoins to strengthen their local money strength. The central bankers have to separate the advantages of the cheaper, faster, and more frequent payment rails of stablecoins from the assets sunk in dollars, which were often their reserves. Some are already taking this moment, such as the Singapore Monetary Authority, which has completed a regulatory framework for stablecoins with a currency.
Japan’s updated Payment Service Act enables banks and licensed trust companies to issue stablecoins supported by Yen. In response to this, SBI, Circle, Ripple, and Startal recently announced plans to bring a stablecoin denominated in Yen together. Monex and Local Fintech, JPYC, also plan local stablecoins. For the Philippines, stablecoins are an immediate solution for the high fees and slow speeds of monthly transfers of $3 billion.
Conclusion and Future Outlook
By developing and regulating their own local currency stablecoins, Asian central banks can keep control of their financial systems and actively shape the digital future instead of simply reacting to it. This model can be replicated in the deep commercial corridors of Asia, so that a network of interoperable stablecoins accelerates settlement and reduces dependence on the US dollar in intraregional trading.
Stablecoins are an expansion of the US currency system, but they don’t have to be. Central bankers and financial supervisory authorities from Pakistan to Korea are wrestling with how to enable the best parts of stablecoin innovation in their economies without accepting dollarization as an intended conclusion. For more information on Asian stablecoins and the myth of dollar dominance, visit https://cryptoslate.com/asian-stablecoins-the-myth-of-dollar-dominance/
