China's Stablecoin Siege vs. Asia's Crypto Breakthrough

China's Central Bank has launched one of its strongest campaigns against stablecoins, labeling the assets a threat to global financial stability and vowing to intensify its crackdown on domestic cryptocurrency activities, according to a Yahoo News report. At the 2025 Financial Street Annual Meeting in Beijing, Pan Gongsheng, Governor of the People's Bank of China (PBoC), warned that stablecoins—digital assets pegged to fiat currencies like the U.S. dollar—have created new vulnerabilities in the global financial system and could undermine the monetary sovereignty of smaller economies, as the Yahoo report noted. He emphasized that stablecoins amplify weaknesses in the global financial system, citing their role in market speculation and failure to meet compliance standards such as customer identification and anti-money laundering (AML) requirements, according to a Coinpedia report. "Stablecoins, as a form of financial activity, still cannot meet the basic requirements of financial supervision," Pan stated, adding that they expose loopholes that could facilitate illegal fund transfers, terrorist financing, and money laundering, the Yahoo report added.

The PBoC has maintained a sweeping ban on crypto trading, mining, and exchange operations since 2017, positioning digital assets as a threat to economic order while promoting the state-backed digital yuan (e-CNY) as a safer alternative, the Yahoo report said. Pan reiterated the central bank's zero-tolerance policy toward private digital currencies, stating that measures implemented in recent years have been "effective" and will continue, and the PBoC also plans to monitor overseas stablecoin developments, signaling continued vigilance against foreign influences on China's financial stability.

Meanwhile, in stark contrast to China's stance, DBS Bank and Goldman Sachs have executed the first-ever over-the-counter (OTC) cryptocurrency options trade between banks, marking a major step toward institutionalizing digital assets in Asia, according to a Yahoo Finance article. The transaction involved cash-settled Bitcoin and Ether options, designed to help both banks hedge exposures linked to crypto products. Jacky Tai, Head of Trading and Structuring at DBS, highlighted the deal as a demonstration of how traditional finance can integrate best practices into the digital asset ecosystem. DBS reported that its clients executed over $1 billion in crypto options and structured note trades in the first half of 2025, with trading volumes rising nearly 60% quarter-over-quarter. Goldman Sachs, an early adopter of crypto derivatives, noted the transaction reflects an evolving market structure and expects continued growth as institutional investors become more active.

Japan has also emerged as a key player in the stablecoin arena, launching JPYC EX—the country's first fully licensed digital yen under the revised Payment Services Act—according to a TradingView article. The yen-backed stablecoin operates on blockchains like Ethereum, Polygon, and Avalanche, with 100% reserves held in yen deposits and government bonds, as a The Block report details. JPYC aims to capture 2% of the global stablecoin market, reaching a projected $70 billion valuation by 2030. Analysts view the move as a strategic step to bridge traditional finance and Web3, enabling instant, low-cost yen transfers for commerce, payroll, and cross-border transactions.

While China's exclusion from the global stablecoin market has not halted its growth—global stablecoin capitalization now exceeds $308 billion—experts note that the absence of China's vast fintech ecosystem limits the sector's potential scale. However, underground usage of dollar-pegged stablecoins persists in China, with investors leveraging offshore exchanges to hedge against yuan volatility.