Stablecoin volumes are booming in Asia, but mainstream banks remain cold. Stables co-founder and CEO Bernardo Bilotta reveals this is not a tech gap but a sophisticated self-preservation strategy.
Asia's Stablecoin Boom vs. Bank Caution
Asia generates nearly 50% of global stablecoin flows, fueling cross-border trade and institutional liquidity. Yet major banks in Singapore, Hong Kong and Jakarta stay notably aloof. Bilotta argues it is not a generational divide or technical ignorance, but protection of their most important balance-sheet asset: relationships with central banks. In many Southeast Asian markets, the digital asset regulatory landscape remains fluid. "Taking stablecoin risk, even just processing, means exposing yourself to reputational risk with the regulator before rules are fully settled," Bilotta said.
Correspondent Banking Trap
Beyond local regulators, Asian banks must answer to a global hierarchy. To facilitate international trade, these institutions rely on correspondent banking relationships with partners in New York and London. Bilotta notes that compliance teams in Western financial hubs are notoriously risk-averse. If a bank in Jakarta or Bangkok starts handling stablecoins, it risks being flagged by its Western partners. The threat of losing a correspondent relationship – effectively cutting the bank off from dollar or euro markets – is a survival logic that far outweighs potential gains from stablecoin integration.
Even for banks willing to ignore the risk, regulatory fragmentation poses a new hurdle. Singapore embedded stablecoin rules into its existing Payment Services Act, while Hong Kong passed a separate stablecoin bill. Critics say these silos hinder growth, but Bilotta sees an essential convergence phase. "Singapore and Hong Kong are taking different approaches to the same goal: treating stablecoins as regulated payment instruments. The core principles – reserve backing, redemption rights, AML compliance – are converging."
Dollar's Unshaken Throne
Currently, 99% of the stablecoin market is pegged to the U.S. dollar, while local-currency tokens like yen or Singapore dollar struggle with low liquidity and high slippage. Bilotta argues that the dominance of dollar-pegged stablecoins like USDT is not historical accident but reflects fundamental market demand. "In emerging Asia, people actively seek dollar exposure. A migrant worker sending money from Singapore to the Philippines wants dollar stability, not a local-currency token. They use USDT because they want dollars, not because they lack a local alternative."
While Bilotta does not expect local stablecoins to challenge dollar dominance in cross-border flows soon, he sees a clear path as a last-mile settlement layer. Stables recently announced a strategic partnership with eStable to integrate institutional-grade banking infrastructure and local stablecoin issuance, extending its core offering beyond USDT corridors to local-currency stablecoin settlements backed by Tether's Hadron. Meanwhile, Japan's move toward regulated bank-issued tokens and Singapore's MAS framework are paving the way for JPY and SGD stablecoins for specific domestic use cases. The real breakthrough will come when these local tokens act as bridges, converting global USDT flows into local fiat at the exact moment of withdrawal. Bilotta suggests that liquidity will finally deepen and true utility will emerge.
Asia's current situation is a tense stalemate: undeniable transaction volumes on one side, rigid compliance requirements on the other. "Until the cost of inaction outweighs the cost of action, the status quo will hold," Bilotta said. But with the infrastructure layer firming up and local-currency tokens beginning to solve the last-mile problem, pressure on these institutions will only grow. The question for Asian banking is no longer whether they understand the technology, but how long they can afford to prioritize survival over evolution.