Onigiri Weekend Digest: Institutional Lens #11

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Good weekend from Onigiri Capital!

Over the past months, we have highlighted the acceleration of global stablecoin adoption—from the GENIUS Act in the U.S. to MiCA implementation in Europe, to the rise of tokenized deposits in Asia. Yet, this week brings another contrast. Two new regulatory developments signal both the tightening of control and the expansion of state-managed experiments in Greater China.

Recap this Week's Headliners

SS #53 - PBoC Reaffirms Crypto Ban and Flags Stablecoin Risks
SS #54 - Taiwan Targets 2026 Launch for Regulated Stablecoin

On one hand, the People’s Bank of China (PBoC) has issued its strongest warning since 2021, doubling down on a comprehensive nationwide crypto ban and explicitly naming stablecoins as a systemic threat due to illicit financing and cross-border capital risks.

On the other, Taiwan is preparing to take its first major step into the regulated stablecoin arena, targeting a late-2026 launch that could reshape cross-border payments and test its currency control framework.

Together, these developments illustrate an increasingly divided policy landscape, where sovereign control, monetary policy, and geopolitical considerations are taking center stage in stablecoin regulation.

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🍙Onigiri Take

Across Asia, regulators are converging on a clear conclusion: stablecoins have evolved from niche digital instruments into components of the broader financial-system architecture. The regional policy response is no longer focused solely on crypto risk—rather, it reflects deeper considerations around monetary sovereignty, capital-flow management, and the structure of future payment rails.

1. Preference for Sovereign-Controlled Digital Rails

China’s renewed enforcement of its crypto ban underscores the priority placed on state-issued or state-supervised digital money, such as the e-CNY. For Beijing, privately issued stablecoins represent unmonitored capital channels that conflict with macro-prudential objectives and capital-control frameworks.

2. Rise of Bank-Issued, Regulated Stablecoins

Taiwan’s 2026 target for its first regulated stablecoin mirrors a broader global trajectory in which banks and licensed financial institutions are expected to become primary issuers. Comparable models are emerging across jurisdictions:

• Japan: trust-based issuance structures

• Singapore: MAS-regulated stablecoin framework

• Hong Kong: tokenised deposits under SFC/HKMA oversight

• European Union: MiCA-compliant e-money tokens

The direction of travel is clear—stablecoin issuance is shifting from start-ups to regulated financial institutions.

3. Regulatory Divergence as a Determinant of Capital Flows

The contrast between mainland China’s comprehensive prohibition and Taiwan’s phased, institution-led adoption illustrates how regulatory architecture will increasingly shape the geography of digital-asset capital flows, potentially becoming a competitive differentiator among regional financial centers.

4. Pushback Against USD-Stablecoin Dominance

Across Asia, regulators are increasingly explicit that USD-denominated stablecoins pose risks to monetary sovereignty and FX stability. Dollar stablecoins are viewed as potential conduits for capital flight, informal dollarization of savings, and circumvention of onshore controls—core reasons behind China’s strict stance and the cautious posture of other Asian economies. Capital-control regimes remain a central constraint on widespread, unregulated stablecoin usage.

5. The Emerging Counter-Strategy: Local-Currency Digital Money

To balance innovation with sovereignty, Asian regulators are actively developing domestic-currency stablecoins and CBDC frameworks, including:

• HKMA’s e-HKD and tokenised deposit pilots

• Proposed HKD-backed stablecoins (Standard Chartered / HKT / Animoca)

• Taiwan’s planned TWD-pegged stablecoin

• Exploratory discussions around KRW-based stablecoins

These initiatives represent a coherent regional shift toward digitising local currencies without deepening dependence on USD-pegged stablecoins, signalling a more managed and sovereignty-aligned evolution of the digital-asset ecosystem in Asia.

🍙Winners & Losers: Institutional Outlook

🍙Under the Hood: The Geopolitics of Stablecoin Control and Financial Infrastructure

PBoC’s reaffirmation is not merely a continuation of its 2021 stance—it's an escalation. By explicitly naming stablecoins as a risk vector for money laundering and illicit transfers, China is signaling that stablecoins have become a priority enforcement target, likely driven by:

• rising underground USDT usage in capital flight,

• cross-border merchant settlement via offshore platforms,

• crypto-related scams involving stablecoin rails.

Taiwan’s direction, in contrast, suggests a recognition that regulated stablecoins can serve as strategic financial infrastructure—especially in:

• digital commerce,

• remittances,

• cross-border settlements with Japan, Singapore, the Philippines, and the U.S.

However, the peg decision (USD vs TWD) will determine the extent of global integration.

Future Trends to Watch

• State-backed vs private stablecoins: Asia is structurally moving toward bank-issued or trust-based models.

• Cross-border stablecoin corridors: Taiwan’s decision could catalyze regional interoperable payment systems.

• Monetary policy localization: Expect more countries to use stablecoin rules as instruments of capital control.

• Dual-track regulatory regimes: Open frameworks (SG, HK, JP) vs restrictive regimes (CN).

🍙Stablecoin ≠ Crypto — The New Battleground for Payments Infrastructure

Stablecoins are rapidly diverging from the speculative crypto ecosystem and becoming core components of digital payment, settlement, and liquidity infrastructure. Regulators now evaluate them not through the lens of token trading, but through:

• prudential requirements

• liquidity and reserves

• cross-border capital implications

• AML/KYC frameworks

• systemic risk to banking deposits

In this paradigm, stablecoins behave more like e-money, money market instruments, or payment obligations, rather than digital assets. Taiwan’s bank-issued stablecoin model reflects this shift: the objective is payments, not speculation.

🍙Institutional Risks & Unknowns

Despite regulatory progress, several uncertainties persist:

1. China’s Enforcement Spillover into Hong Kong: Beijing’s interventions could create unpredictable policy shifts affecting tokenized securities, stablecoin pilots, mainland-linked issuers.

2. Taiwan’s Peg Decision (USD vs TWD): This single decision determines whether Taiwan’s stablecoin becomes a domestic payment tool (TWD-peg), or a globally useful settlement asset (USD-peg).

3. Fragmented Asian Regulatory Landscape: Different jurisdictions are building non-interoperable frameworks, risking fragmentation across settlement networks.

4. Banking System Integration: Questions remain around liquidity, redemption cycles, and on-chain settlement guarantees when banks issue fiat tokens for the first time.

5. Capital Flow Sensitivities：Stablecoins inherently challenge capital control mechanisms—especially in economies with managed exchange regimes.

6. Global Standard-Setting：There is no unified global standard for disclosure, supervision, reserves, or cross-border usage—posing systemic uncertainties as adoption scales.

Onigiri Capital (onigiri.vc), a US$50 million blockchain-focused investment fund, launched by Saison Capital, the venture arm of Japan’s Credit Saison. Onigiri Capital is on a mission to chart the next chapter of finance and invest in seed and Series A blockchain startups in stablecoins, payments, RWAs, DeFi and financial infrastructure. The fund’s strategy emphasizes connecting startups to Asia’s growing digital asset markets.

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