Asian Banks Embrace Stablecoins to Combat Deposit Flight

What to Know

Asian banks are utilizing stablecoins to counteract deposit flight and enhance cross-border transactions.
Major banks in Korea, Japan, and Hong Kong are looking into stablecoins connected to local currencies to improve trade finance and lessen reliance on conventional banking.
Bakkt Holdings is raising $1 billion to invest in Bitcoin as it faces setbacks from losing major clients and is exploring strategic shifts.

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While stablecoins like USDT and USDC were prominently discussed in U.S. media recently, the strategic adoption of these currencies in Asia is quietly reshaping the region’s cross-border finance frameworks.

Stablecoin image

Asian banks increasingly view stablecoins such as USDT and USDC as defensive tools against deposit flight and diminishing transaction revenue. Behind the scenes, stablecoins are significantly influencing the region’s financial infrastructure.

In a recent interview with CoinDesk, Fireblocks’ Chief of Asia, Amy Zhang, noted that leading banks in Korea, Japan, and Hong Kong are actively investigating local currency stablecoins to combat these risks.
“If I’m not one of the banks banking Circle or banking Tether, am I going to lose deposits? That’s a huge risk for banks,” said Zhang.

In Korea, a consortium is forming among eight major banks, including KB Kookmin and Shinhan, to launch a Korean won-pegged stablecoin by 2026 as a direct answer to the increasing usage of USDT and USDC for international transactions.

Japan’s major banking institutions, MUFG, SMBC, and Mizuho, are testing yen-pegged stablecoins to enhance trade finance efficiency and reduce reliance on traditional cross-border payment methods. Similarly, Hong Kong’s Bank of East Asia has piloted its own USD and HKD stablecoin network.

Payment service providers (PSPs) are also driving the shift toward stablecoin adoption, moving away from expensive traditional banking routes.

“A year ago, PSPs were asking if they should move to stablecoins. Now they’re saying, ‘I’m handling a billion in client flows; I need a better solution,’” Zhang explained.

Fireblocks, which processed over $3 trillion in digital assets last year, reports that stablecoins now account for about half of its transaction volume.

Zhang highlighted an uptick in usage among leading e-commerce companies in Asia. Reports indicate that China’s JD.com aims to significantly cut supplier payment costs through stablecoins.

This transformation across the region’s financial landscape may soon be the headline for the evolving story of stablecoins.