Asia shifts Toward Local Stablecoins with Japan and Korea Leading: Report

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.

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,

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.

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