Will Stablecoin Become a New De-dollarization Weapon?

While the U.S. continues to shape its regulatory framework for stablecoins and crypto, its influence is rippling across global markets. Japan, South Korea, Hong Kong, and Singapore are responding in distinct ways. We anticipate more rapid and pro-crypto developments coming out of East Asia.

Japan’s Financial Services Agency (FSA) has submitted a proposal to reclassify crypto from "miscellaneous income" to an asset class similar to securities and other traditional financial products. If passed, the proposal would allow financial institutions in Japan to issue crypto ETFs and reduce the capital gains tax on crypto from 55% to 20%. Cointelegraph

Lee Jae-myung of South Korea’s Democratic Party won the recent presidential election. Both he and his opponent had pledged to adopt more pro-crypto policies. Recently, the ruling party submitted the Digital Asset Basic Act, a proposal that, if passed, would allow local firms to issue stablecoins. The primary motivation behind the act is to counter foreign stablecoin issuers and prevent capital outflows. Binance

There is also growing optimism that regulators will soon approve Bitcoin spot ETFs and tokenized securities. In addition, a long-standing ban is expected to be lifted soon, allowing institutions to trade crypto in South Korea.

Compared to Japan and South Korea, Hong Kong is ahead in regulating stablecoins and crypto ETFs. Its Stablecoin Ordinance, passed in May, will take effect on August 1. Officially licensed stablecoins can be used for on-chain trading and cross-border payments.

On August 26, Hong Kong introduced the Policy Statement 2.0 on the Development of Digital Assets in Hong Kong, outlining the framework to grow Hong Kong into an international hub of digital assets. Hong Kong government

Beijing has long aimed to internationalize its currency RMB. Offshore RMB - circulating outside Mainland China - is used for trade, investment, and financial products, with looser capital controls than onshore RMB. It’s traded in global hubs, especially Hong Kong, the largest center.

Before stablecoin regulation advanced, China focused on building a central bank digital currency to reduce reliance on the U.S. dollar. Stablecoins now present a new opportunity.

Hong Kong regulators are expected to favor stablecoins pegged to the Hong Kong Dollar or offshore RMB, while discouraging those tied to foreign currencies like the USD. Decrypt

Under Singapore’s Financial Services and Markets Act of 2022 (FSM Act), June 30 is the deadline for digital token service providers (DTSPs), which are incorporated in Singapore but only serve the overseas market, to discontinue their services or apply for a license. Singapore’s MAS has granted some Digital Token Payment (DTP) licenses to companies offering services in Singapore. Some companies express their frustration; however, the FSM Act was passed in 2022. They shouldn’t be. Contelegraph