Stablecoins have evolved into a fundamental pillar of the digital financial ecosystem, serving as a stable medium for transactions, lending, and investments. Their ability to maintain a fixed value makes them an essential tool for cross-border payments, decentralized finance (“DeFi”), and everyday financial operations. As their usage continues to expand, regulators worldwide are implementing stricter oversight to ensure reserve transparency, financial security, and consumer protection, accelerating the demand for high-quality backing assets. Regulations in the United States, Hong Kong, and the European Union have recently enforced guidelines on stablecoin issuance, requiring issuers to hold high-quality reserve assets like cash equivalents and treasury securities.
While USD-backed stablecoins remain dominant, non-USD alternatives and other asset-backed stablecoins are gaining traction, particularly where businesses and governments seek local currency alternatives or for niche applications. We believe further deepening of stablecoins would largely hinge on the availability of reliable reserve assets, regulatory clarity, and cross-border financial harmonization for ensuring they continue to act as a stable and secure financial instrument.