Asia-Pacific (APAC) jurisdictions chart divergent paths of digital currency development. Some are pushing central bank digital currencies, while others embrace private stablecoins.
Hong Kong completed its e-HKD pilot program on October 28, while Japan’s JPYC stablecoin surpassed 50 million yen in 48 hours. South Korea warned of unpegging risks and Australia clarified regulatory requirements for stablecoins on October 29.
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Hong Kong and the United Arab Emirates advance CBDC infrastructure
The Hong Kong Monetary Authority released the e-HKD pilot phase 2 report on October 28. The report concluded a comprehensive evaluation of 11 pilot projects involving major financial institutions. HSBC, Hang Seng Bank and DBS Hong Kong participated in these tests.
The report indicated that the digital Hong Kong dollar is suited for wholesale financial applications rather than immediate retail deployment.
According to the HKMA’s findings, the e-HKD showed promising capabilities in three areas. These include settlement of tokenized assets, programmability for automated transactions, and offline payment functionality.
The authority emphasized that the e-HKD is suitable for large-value transactions as an instrument issued by the central bank free of credit risk. The HKMA confirmed that it will complete preparatory work for potential e-HKD retail applications by the first half of 2026 and will soon prioritize wholesale use cases.
The timing aligns with broader regional CBDC initiatives. The United Arab Emirates confirmed its plans to launch its digital dirham for retail use in the fourth quarter of 2025. It will be treated as legal tender alongside physical currency. Hong Kong’s measured approach contrasts with this accelerated timetable, which reflects different regulatory priorities and market conditions.
Japan and South Korea navigate the stablecoin terrain
Japan marked a major milestone on October 27 with the official launch of the JPYC. This is the country’s first regulated yen-pegged stablecoin that complies with the revised Payment Services Law. On October 29, the token had surpassed 50 million yen in circulation.
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It is distributed across three blockchain networks. Polygon hosts approximately 21.34 million yen and 1,620 holders. Avalanche has 17.03 million yen and 628 starters. Ethereum represents 16 million yen and 108 holders.
JPYC Representative Director Noritaka Okabe warned users on October 29 about operational risks. He highlighted in particular the risks related to the provision of decentralized foreign exchange liquidity. Fintech company Secured Finance announced complementary products on October 28. These include DeFi institutional lending services that use JPYC infrastructure.
South Korea took a contrasting stance. The Bank of Korea released a report warning of decoupling risks associated with won-denominated stablecoins despite suspending its digital won CBDC project in June 2025.
The central bank emphasized that private stablecoin issuers lack the institutional trust mechanisms necessary to maintain stable currency rates. The bank recommended that traditional banks lead stablecoin issuance efforts to provide adequate safeguards.
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Industry observers anticipate that the first wave of regulated won-pegged stablecoins will enter the market between late 2025 and early 2026.
Australia clarifies stablecoin regulatory framework
The Australian Securities and Investments Commission issued updated guidance on October 29. Under existing law, the guidance classifies stablecoins, wrapped tokens, tokenized securities, and digital asset wallets as financial products. Companies offering these types of products now require local financial services licenses. This marks an important regulatory clarification for the Pacific region.
ASIC Commissioner Alan Kirkland said licensing ensures consumers receive full legal protection and allows for regulatory action against harmful practices. The regulator granted inaction relief across the sector until June 30, 2026.
This allows companies time to evaluate requirements and obtain licenses. The guidance follows months of industry consultation. It builds on the September class exemption that allows licensed brokers to distribute stablecoins without separate regulatory approvals.
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Australia’s Treasury proposed a bill last month. The legislation requires crypto exchanges and service providers to hold financial services licenses, complementing ASIC’s updated framework. The regulatory developments position Australia alongside Singapore and Hong Kong in establishing comprehensive oversight of digital assets while supporting market development.
APAC regional models and market implications
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 a 70.1 percent market share among non-US dollar stablecoins in Southeast Asia during the second quarter of 2025. Data shows that 258,000 transactions were recorded.
The divergence in digital currency strategies reflects different national priorities. These include considerations on monetary sovereignty, financial innovation and payments infrastructure maturity. Hong Kong’s emphasis on wholesale CBDC applications supports the development of the tokenization ecosystem and facilitates cross-border settlement through the mBridge Project.
Japan’s regulatory framework allows for 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 advantages 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 Asia-Pacific digital currency architectures take shape. The implications extend to the efficiency of cross-border payments, financial inclusion and the evolution of the regional monetary system.