APAC’s Digital Currency Showdown: CBDC vs Stablecoin-Who’s Winning the Race?

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APAC’s Digital Currency Strategies Diverge—CBDC vs Stablecoin

Digital currency is developing differently across Asia and the Pacific. Some countries in the region are creating their own digital currencies issued by central banks, while others are focusing on privately issued stablecoins.

Hong Kong finished testing its digital currency pilot program on October 28th, and Japan’s new stablecoin, JPYC, quickly reached a value of over 50 million yen in just two days. Meanwhile, South Korea cautioned about the potential dangers of stablecoins losing their fixed value, and Australia announced clearer rules for how stablecoins will be regulated on October 29th.

Hong Kong and UAE Advance CBDC Infrastructure

I was reading the latest report from Hong Kong’s Monetary Authority about their digital currency pilot program – the e-HKD. They just finished Phase 2, and it sounds like they did a really thorough test with 11 different projects. Big names like HSBC, Hang Seng Bank, and DBS Hong Kong were all involved in trying it out, which is pretty encouraging to see.

The report found that a digital Hong Kong dollar is better suited for use in large financial transactions than for everyday purchases by the general public.

The Hong Kong Monetary Authority (HKMA) has found that a digital Hong Kong dollar (e-HKD) works well in several key areas. It could efficiently settle transactions involving digital assets, be programmed to automate payments, and even allow payments without an internet connection.

The issuing authority highlighted that the digital Hong Kong dollar (e-HKD) is well-suited for large transactions because, as a central bank-issued currency, it carries no credit risk. The Hong Kong Monetary Authority (HKMA) stated they expect to finish preparations for possible use of the e-HKD by consumers around the first half of 2026, and they will focus on business and financial applications in the near future.

Hong Kong’s financial regulator, the HKMA, has shared an update on its digital currency project, e-HKD. The report details progress from several industry tests, including a promising system for transferring money between different blockchains, developed with Chainlink, ANZ, China AMC, and Fidelity International.

— Chainlink (@chainlink) October 28, 2025

This development fits with other countries in the region exploring digital currencies. The United Arab Emirates has announced it will launch its Digital Dirham for everyday use in late 2025, and it will be officially recognized as money alongside cash. Hong Kong is taking a more cautious approach, which shows it has different priorities and faces different circumstances than the UAE.

Japan and South Korea Navigate Stablecoin Terrain

On October 27th, Japan launched JPYC, its first officially regulated stablecoin tied to the value of the yen. This new digital currency complies with updated payment laws, and within just two days, over 50 million yen worth of the token was already in use.

The currency is spread across three different blockchain networks: Polygon, Avalanche, and Ethereum. Polygon currently holds about 21.34 million yen with 1,620 owners. Avalanche holds 17.03 million yen and has 628 owners. Ethereum holds 16 million yen, distributed among 108 owners.

JPYC has introduced a new stablecoin whose value is tied to the Japanese yen. This digital currency is supported by Japanese government bonds and savings accounts. The company intends to release up to 10 trillion yen worth of the stablecoin over the next three years and won’t charge fees for transactions, hoping to encourage widespread adoption.

— Independent Reserve (@indepreserve) October 29, 2025

On October 29th, Noritaka Okabe, head of JPYC, warned users about potential risks when using their services, specifically mentioning the dangers of providing liquidity on decentralized exchanges. Meanwhile, on October 28th, Secured Finance, a financial technology company, revealed new products that build on JPYC’s technology, including DeFi lending services for institutions.

From my analysis, South Korea is taking a somewhat unusual approach to stablecoins. While they’ve put their own digital won project on hold – with a planned suspension for June 2025 – the Bank of Korea recently issued a warning about the potential risks of losing the peg with won-based stablecoins. It’s a curious combination of pausing development of a CBDC while simultaneously highlighting risks in the private stablecoin market.

The central bank pointed out that private companies issuing stablecoins haven’t established the reliable systems needed to keep their value stable. They suggest that traditional banks should handle stablecoin issuance instead, as they have the necessary protections in place.

Experts predict the first officially approved stablecoins tied to the South Korean won will likely become available between late 2025 and early 2026.

Australia Clarifies Stablecoin Regulatory Framework

On October 29, Australia’s financial regulator, ASIC, released new advice clarifying how existing laws apply to digital assets. This guidance means stablecoins, wrapped tokens, tokenized securities, and digital wallets are now considered financial products, requiring companies offering them to obtain Australian financial services licenses. This provides important clarity for the regulation of these assets in the Pacific region.

Alan Kirkland, from ASIC, explained that licensing safeguards consumers by giving them full legal rights and allowing regulators to stop unfair or damaging behavior. Currently, the industry won’t face penalties for non-compliance until June 30, 2026.

This gives companies the necessary time to figure out what’s needed and get the proper licenses. The new instructions are based on feedback from industry experts gathered over several months and expand on a previous decision in September that allowed approved companies to distribute stablecoins without extra permissions.

— Aaron Lane (@AMLane_au) October 29, 2025

Last month, Australia’s Treasury suggested new laws for cryptocurrency businesses. These laws would require crypto exchanges and service providers to obtain financial licenses, building on recent updates from ASIC, the corporate regulator. This puts Australia in line with countries like Singapore and Hong Kong, creating clear rules for digital assets while encouraging growth in the market.

APAC Regional Models and Market Implications

Singapore is taking a balanced approach to digital currencies, exploring its own central bank digital currency (CBDC) while also fostering a healthy environment for regulated stablecoins. The XSGD, a stablecoin pegged to the Singapore dollar, became the leading non-US dollar stablecoin in Southeast Asia by the second quarter of 2025, capturing 70.1% of the market and processing 258,000 transactions.

Coinbase is moving closer to its goal of 25 million users and $100 billion in on-chain assets thanks to the integration of XSGD, a Singapore dollar stablecoin, planned for October 2025. XSGD is currently the leading Singapore dollar stablecoin in Southeast Asia, handling over 70% of related transactions with more than 258,000 users.

— e_camli.ink ❖❖ | π² (@ekinoks_26) October 16, 2025

As a crypto investor, it’s clear to me that different countries are approaching digital currencies in very different ways, and it all comes down to what *they* want to achieve. Some are focused on maintaining control over their money, while others are excited about new financial technologies or improving how payments work. For example, Hong Kong is really pushing forward with digital versions of currencies for banks and businesses – not so much for everyday people yet. This is helping them build out a whole system for tokenizing assets and making international payments easier, especially with a project called mBridge. It’s interesting to see how these different priorities are shaping the future of crypto.

Japan encourages the development of new stablecoins through its flexible regulations. South Korea is now focusing on stablecoins issued by banks, likely because creating a central bank digital currency (CBDC) might be too expensive or complex. Australia offers clear legal rules for stablecoin companies, balancing innovation with the need to protect consumers.

People involved in the market are keeping a close eye on how digital currencies are developing in Asia and the Pacific. These changes could significantly improve how easily payments are made across borders, help more people access financial services, and even change how money systems work in the region.

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2025-10-30 03:17