Onigiri Weekend Digest: Institutional Lens #20

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Good weekend from the Onigiri team.

This week’s headlines point to a single, unifying theme: stablecoins are being repriced by regulation, not growth. The conversation is shifting away from circulation size and revenue alone, toward who can operate within regulatory guardrails and be trusted as systemically relevant financial infrastructure.

Recap this Week's Headliners

SS #71 - Hong Kong Sets March Launch for Stablecoin Licensing 
SS #72 - Tether Slashes Fundraising Target as Investors Reject Massive Valuation

Our team will be in Hong Kong next week for Consensus HK 2026, and with the strong momentum around the HKMA’s stablecoin regime, this is shaping up to be a pivotal moment for the city’s digital finance landscape. We are excited about Hong Kong’s direction and look forward to meeting regulators, banks, fintech builders, and institutional partners on the ground.

If you will be around—or would like to connect—please reach us at [email protected].

Enjoy the read!

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🍙Onigiri Take

This week’s headlines capture a single, powerful trend: stablecoins are moving from crypto-native experimentation to regulated financial infrastructure.

• Hong Kong’s March 2026 licensing launch formalizes stablecoins as a regulated payment instrument in a top-tier financial hub, with an explicit bias toward prudence, capital strength, and operational resilience.

• Tether’s valuation reset signals that even highly profitable crypto incumbents are not immune to institutional skepticism without regulatory alignment.

Together, they mark a bifurcation of the stablecoin market: regulated, bank- and institution-aligned issuers on one side; offshore, crypto-native scale players on the other—both large, but priced and trusted very differently.

🍙Winners & Losers: Institutional Outlook

🍙Under the Hood: From Sandbox to Systemically Relevant Money

Hong Kong Sets March Launch for Stablecoin Licensing

Hong Kong’s transition from a voluntary sandbox to a mandatory licensing regime is deliberate and conservative. By approving only a very small number of issuers initially—and imposing HK$25M paid-up capital, 100% high-quality liquid reserves, par redemption within one business day, and a ban on interest payments—the HKMA is explicitly framing stablecoins as payments infrastructure, not investment products.

This approach is designed to:

• Prevent systemic risk and consumer harm.

• Anchor stablecoins firmly within existing monetary and banking frameworks.

• Encourage a “flight to quality” across Asia toward HKMA-licensed tokens for settlement and trade.

Tether Slashes Fundraising Target

Tether’s fundraising recalibration—from a speculative $500B valuation narrative to a more modest $5B strategic raise—underscores how regulatory posture now dominates valuation discussions, even for firms with ~$10B annual profits and massive Treasury holdings.

The market’s message is clear:

• Cash flow alone is insufficient when regulatory uncertainty remains unresolved.

🍙Stablecoin ≠ Crypto — Stablecoins as Regulated Monetary Rails

Stablecoins are increasingly diverging from “crypto” as an asset class. Under regimes like Hong Kong’s, they are being positioned as:

• Digital FX instruments

• Programmable settlement rails

• On-chain representations of regulated money

This reframing strips away speculative upside but unlocks institutional-scale adoption—particularly in trade finance, treasury operations, and cross-border payments. The trade-off is intentional: trust and legal certainty over composability and yield.

🍙Institutional Risks & Unknowns

Despite the progress, several open questions remain:

1. Market Concentration Risk – High capital thresholds may consolidate issuance among a few dominant players.

2. Profitability Constraints – Yield bans and full reserve requirements compress issuer margins.

3. Cross-Border Interoperability – Fragmented regulatory regimes may limit seamless global use.

4. Shadow Liquidity – Offshore stablecoins may continue to dominate in less regulated corridors.

5. Valuation Disconnects – Private market pricing may lag the new regulatory reality.

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.

If you'd like to discuss or contribute to the next Institutional Lens, contact us at [email protected]

Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.