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Throughout 2025, Asian financial institutions and regulators have significantly accelerated efforts to build stablecoin infrastructure linked to local currencies rather than the U.S. dollar. Japan and South Korea, in particular, have emerged as key testing grounds for yen- and won-denominated stablecoins, marking a coordinated challenge to the dollar’s near-total dominance of the stablecoin market.
Asia's stablecoin focus shifted in 2025.
Japan and South Korea launched yen and won-backed stablecoins. This move had support from major banks and regulators.
The aim is to provide local currency options onchain. However, dollar stablecoins still dominate the market, holding… pic.twitter.com/svm8r2EWW3
— Most Angry Bull (@Mostangrybull) January 2, 2026
In Japan, fintech firm JPYC launched the country’s first legally backed yen stablecoin in October, while the nation’s three largest banks began pilot programs with regulatory support. South Korea has followed a similar path, rolling out won-based stablecoins across multiple blockchain networks.
Japan Advances Real-World Use of Yen Stablecoins
On October 27, 2025, JPYC officially issued JPYC, Japan’s first funds-transfer–type yen stablecoin. Each JPYC token is fully redeemable at a fixed rate of 1 JPYC = 1 Japanese yen, with reserves backed by bank deposits and Japanese government bonds.
Japan’s three megabanks, MUFG, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, have also moved toward direct participation. In November, Japan’s Financial Services Agency (FSA) selected their joint stablecoin initiative as a supported project under its FinTech Proof-of-Concept Hub.
Finance Minister Satsuki Katayama stated that the government would assist the trials by clarifying regulatory interpretations, signaling strong institutional backing for yen-denominated digital currencies.
Won Stablecoin Projects Gain Momentum in South Korea
South Korea has also seen rapid progress. In September, digital asset custody firm BDACS, in partnership with Woori Bank, launched the country’s first won-denominated stablecoin, KRW1, on the Avalanche blockchain. Each KRW1 is pegged 1:1 to the Korean won, with reserves held in escrow accounts managed by Woori Bank.
🚨JUST IN: South Korea’s BDACS is partnering with #Circle to launch a won-backed stablecoin, KRW1. pic.twitter.com/NxU8Psyb9h
— Coin Bureau (@coinbureau) October 29, 2025
In October, another won stablecoin, KRWQ, debuted on Coinbase’s Base network. Meanwhile, KakaoBank advanced its own won stablecoin initiative into the active development phase, highlighting growing competition among major financial players.
Dollar Dominance Remains, but Alternatives Take Shape
Despite these developments, the U.S. dollar continues to dominate the stablecoin market. According to CoinGecko, total stablecoin market capitalization stands at approximately $312 billion, with more than 97% denominated in U.S. dollars. Yen-based stablecoins account for just $16.4 million, underscoring how early this shift remains.
A TRM Labs representative for Asia-Pacific cautioned that less than a year of activity is insufficient to judge true adoption, noting that current efforts are more about strategic positioning than transaction volume.
OSL Research head Eddie Shin emphasized that local-currency stablecoins are not designed to replace the dollar, but to expand choice and resilience within the digital payments ecosystem. While Bitcoin (BTC) has historically driven crypto market growth, Shin argued that utility-focused tokens will become increasingly important.
Looking ahead to 2026, analysts expect Northeast and Southeast Asia to evolve into a multi-currency stablecoin corridor, creating new opportunities centered on payments, settlement, and cross-border commerce rather than speculation.
