Onigiri Weekend Digest: Institutional Lens #8

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Good weekend from Onigiri Capital!

This week, we zoom into the developments from the Bank of England and the Monetary Authority of Singapore, highlighting a gradual but unmistakable shift in how advanced financial jurisdictions are approaching stablecoins. 

Recap this Week's Headliners

SS#47 - UK Central Bank Proposes Strict Stablecoin Regime 
SS#48 - Singapore Regulates Stablecoins, Pilots CBDC

The UK is introducing a cautious, stability-first framework for systemic sterling stablecoins, while Singapore is moving toward operationalizing tokenized finance through wholesale CBDC settlement trials and forthcoming stablecoin legislation. Although the approaches differ, both point toward the same broader direction: stablecoins are increasingly being shaped to operate alongside — not outside — existing monetary and financial systems.

For Onigiri, the key takeaway is that the next phase of the stablecoin market will be defined less by rapid retail adoption and more by measured regulatory integration, institutional safeguards, and compatibility with real-world financial infrastructure. The jurisdictions setting clearer standards today are likely to shape how stablecoins evolve globally, and issuers that adapt early to these expectations will be best positioned to serve institutional users, support tokenized asset markets, and participate in emerging cross-border settlement frameworks.

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🍙Onigiri Take

Across the UK and Singapore, a consistent pattern is emerging:

1. Stability and monetary alignment now dominate policy design. Regulators view stablecoins not just as payment tools but as potential settlement assets with macro-financial implications.

2. Institutional usage is becoming the anchor use case. Tokenized bills, wholesale CBDC pilots, and high-quality reserve mandates point toward a stablecoin market built for financial institutions, corporates, and regulated intermediaries.

3. Regulatory clarity is becoming a competitive differentiator. Jurisdictions offering structured, enforceable, and credible frameworks will attract quality issuers and institutional capital.

4. A dual-track stablecoin ecosystem will emerge:

   • Institution-grade stablecoins with explicit reserve, redemption, and governance requirements

   • Crypto-native stablecoins remaining within DeFi and retail markets under lighter regimes

Onigiri’s view: Stablecoins are entering a phase defined by regulatory convergence, operational discipline, and integration with tokenized financial infrastructure. Issuers capable of meeting these expectations will be positioned to play central roles in the next wave of institutional digital finance.

🍙Winners & Losers: Institutional Outlook

🍙Under the Hood: What the UK and Singapore Are Really Signalling

1. United Kingdom — A Stability-First Systemic Framework

The Bank of England proposes a model aimed at mitigating systemic risk and deposit displacement:

• Temporary holding caps: £20k per individual, £10m per business

• Reserve structure: 40% unremunerated BOE deposits, 60% short-term UK sovereign debt

• Two-tier regime: systemic coins supervised by BOE, non-systemic coins by FCA

This model directly addresses risks identified by BIS/FSB, including:

• illicit finance exposure

• run risk

• reserve opacity

• cross-border supervisory gaps

The UK is prioritizing monetary stability and financial system protection over rapid market scaling. It is unlikely to attract all issuers, but those able to meet the standards will gain a reputational premium.

2. Singapore — Bridging Tokenization with Real-World Settlement

MAS is advancing on two coordinated tracks:

a. Tokenized government bills with wholesale CBDC settlement

• Enables secure, on-chain delivery-versus-payment

• Supports the broader Project Guardian initiative

• Positions tokenization as a viable financial-market infrastructure layer

b. New stablecoin legislation

• Focus on reserve quality, redemption reliability, and governance

• Designed to attract global stablecoin issuers seeking a high-trust jurisdiction

• Complements Singapore’s role as a hub for digital assets, capital markets, and institutional liquidity

Singapore’s approach is pragmatic and commercially aligned, aiming to create usable, interoperable digital money rails for the financial industry.

🍙Stablecoin ≠ Crypto — Stablecoins as Regulated Digital Money Infrastructure

The UK and Singapore both reinforce a structural distinction:

• Stablecoins are being shaped as digital settlement assets, not speculative instruments.

• Regulatory frameworks increasingly resemble prudential or payments regulation, not crypto-asset treatment.

• Interoperability with banking and capital markets — not retail crypto usage — is becoming the anchor design goal.

This evolves stablecoins into:

• trusted instruments for corporate and institutional payments

• settlement assets for tokenized securities

• components of cross-border liquidity networks

• complements (not competitors) to central bank digital initiatives

Stablecoins are moving toward a role that is adjacent to sovereign money, not outside it. 

🍙Institutional Risks & Unknowns

1. Stablecoins continue to present illicit finance risks due to pseudonymous transfers and the ability to bypass regulated intermediaries, prompting jurisdictions to strengthen AML/CFT oversight.

2. In markets facing currency instability, increased reliance on USD stablecoins may erode domestic monetary sovereignty and accelerate capital outflows.

3. Vulnerabilities such as opaque reserves, uninsured deposits, and past de-pegs underscore the need for stronger reserve, risk management, and redemption standards, which regulators like the UK and Singapore are now formalizing.

4. Persistent differences in national regulatory approaches create opportunities for cross-border arbitrage and uneven enforcement, highlighting the ongoing challenge of achieving global regulatory alignment.

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.

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