Jurisdictions in the Asia-Pacific region (APAC) are charting different digital currency development paths. Some are promoting central bank digital currencies, while others are adopting private stablecoins.
Hong Kong completed the e-HKD pilot program on October 28th, and Japan’s JPYC stablecoin exceeded 50 million yen within 48 hours. South Korea warned of the risks of depegging, and Australia clarified its regulatory requirements for stablecoins on October 29.
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Hong Kong and UAE promote CBDC infrastructure
The Hong Kong Monetary Authority released the second stage report of the e-HKD pilot program on 28 October. The report completed an extensive evaluation of 11 pilot projects involving major financial institutions. HSBC, Hang Seng Bank and DBS Hong Kong participated in these trials.
The report notes that the digital Hong Kong dollar is more suitable for wholesale financial applications than for immediate retail deployment.
According to the HKMA’s findings, e-HKD showed promising capabilities in three areas. These include tokenized asset settlement, automated transaction programmability, and offline payment capabilities.
The authorities emphasized that e-HKD is suitable for large transactions as a central bank-issued product with no credit risk. The HKMA has confirmed that preparatory work for potential retail e-HKD applications will be completed by the first half of 2026, with wholesale use cases being prioritized immediately.
The timing is consistent with broader regional CBDC initiatives. The United Arab Emirates has confirmed plans to launch digital dirhams for retail in the fourth quarter of 2025. Digital dirhams are treated as legal tender, just like physical currency. Hong Kong’s cautious approach, reflecting different regulatory priorities and market conditions, stands in contrast to this accelerated timeline.
Japan and South Korea navigate stablecoin terrain
On October 27th, Japan reached an important milestone with the official launch of the JPYC. It is the first regulated yen-pegged stablecoin in Japan that complies with the revised Payment Services Act. By October 29th, the amount of tokens in circulation exceeded 50 million yen.
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It is distributed across three blockchain networks. Polygon hosts approximately 21.34 million yen and 1,620 holders. Avalanche is worth 17.03 million yen and has 628 holders. Ethereum is valued at 16 million yen and has 108 holders.
On October 29, JPYC Representative Director Noritaka Okabe warned users of operational risks. He particularly highlighted the risks associated with providing liquidity on decentralized exchanges. Financial technology company Secured Finance announced a complementary product on October 28th. This includes DeFi lending services for institutions using JPYC infrastructure.
South Korea took a contrasting position. Despite suspending the digital won CBDC project in June 2025, the Bank of Korea has released a report warning of depegging risks associated with won-denominated stablecoins.
The central bank stressed that private stablecoin issuers lack the necessary institutional trust mechanisms to maintain a stable currency peg. The bank recommended that traditional banks lead the stablecoin issuance effort and provide appropriate safeguards.
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Industry observers expect the first wave of regulated Wompeg stablecoins to enter the market between late 2025 and early 2026.
Australia clarifies regulatory framework for stablecoins
The Australian Securities and Investments Commission issued updated guidance on 29 October. Under current law, the guidance classifies stablecoins, wrapped tokens, tokenized securities, and digital asset wallets as financial instruments. Businesses offering such products now require a local financial services license. This represents important regulatory clarification in the Pacific region.
ASIC Commissioner Alan Kirkland said the license would ensure consumers had full legal protection and enable regulatory action against harmful practices. The regulator has granted sector-wide no-holds-barred relief until June 30, 2026.
This gives businesses time to evaluate their requirements and obtain licenses. This guidance has been developed following several months of industry consultation. This builds on a September class exemption that allows licensed intermediaries to distribute stablecoins without separate regulatory approval.
Australia’s Treasury introduced the bill last month. The law requires cryptocurrency exchanges and service providers to hold a financial services license, complementing ASIC’s modern framework. With regulatory developments, Australia is in a position to join Singapore and Hong Kong in establishing comprehensive digital asset oversight while supporting market development.
APAC regional model and market impact
Singapore has established itself as a hybrid model. It maintains both CBDC research and a thriving ecosystem of regulated stablecoins. The Singapore dollar-backed XSGD stablecoin captured 70.1% market share among non-USD stablecoins in Southeast Asia in the second quarter of 2025. According to the data, 258,000 transactions were recorded.
Differences in digital currency strategies reflect different national priorities. These include considerations around monetary sovereignty, financial innovation, and payment infrastructure maturity. Hong Kong is focused on wholesale CBDC applications, supporting the development of a tokenization ecosystem and facilitating cross-border payments through Project mBridge.
Japan’s regulatory framework enables market-driven stablecoin innovation. South Korea’s pivot from CBDCs to bank-backed stablecoins suggests that practical considerations around implementation costs may outweigh the theoretical benefits of central bank control. Australia’s regulatory clarity provides legal certainty for stablecoin operators while maintaining consumer protection.
Market participants continue to monitor these developments as the Asia-Pacific digital currency architecture takes shape. The impact extends to the efficiency of cross-border payments, financial inclusion, and the evolution of regional monetary systems.
