This article first appeared in The Edge Malaysia Weekly on August 25, 2025 - August 31, 2025
COMPANIES linked to stablecoins have seen massive gains globally on the back of supportive regulatory frameworks towards this new emerging technology.
This comes as US President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act of 2025 to develop a regulatory regime for stablecoins, which could enter mainstream use for sending and receiving payments. For perspective, the stablecoin market has expanded 62% to US$269 billion (RM1.14 trillion) over the past one year, according to tracker DeFiLlama.
While the Securities Commission Malaysia (SC) has not recognised stablecoins as capital market products under the regulator’s proposed framework, jurisdictions such as Japan and Singapore have begun recognising them, underscoring the critical role of regulated stablecoins in financial innovation.
Japanese start-up JPYC, for one, will issue its first stablecoin pegged to the yen later in the year, which will be fully convertible to the yen and backed by domestic savings and Japanese government bonds. Demand is expected to come from institutional investors, hedge funds and family offices in Japan, according to a Reuters report.
The Financial Times reported that the European Union was speeding up its plans for a digital euro on a public blockchain after the US passed its stablecoin law.
In response to queries from The Edge, SC says the availability of tokenised settlement vehicles is a critical enabler for the broader tokenised asset ecosystem.
“This will support more efficient settlement processes and facilitate investment in tokenised capital market products and digital assets,” it says. The commission also highlights the launch of the Digital Asset Innovation Hub by Bank Negara Malaysia in June this year, which focuses on programmable money and ringgit-based stablecoins.
Unlike traditional cryptocurrencies, a stablecoin’s price is not set by supply and demand, but a range of mechanisms is employed to ensure the price remains pegged to that asset.
Stablecoins are typically pegged to a fiat currency and offer faster and cheaper transactions. As a result, they can be used as a means of payment, subject to the effectiveness of their value stabilisation mechanism.
According to Kenanga Investment Bank’s white paper titled “Project Juara: Malaysia’s Asset Tokenisation Opportunity”, stablecoins are a foundational building block for any tokenised financial system. Without a reliable, on-chain settlement layer, many of the promised efficiencies of asset tokenisation — such as atomic settlement, 24/7 transaction windows and real-time fund flows — remain theoretical.
“Stablecoins close this gap, functioning as digital cash within tokenised networks”, according to the white paper.
Late last year, Singapore announced plans to advance tokenisation in financial services. Through Project Guardian, it is facilitating the commercialisation of products and services by connecting a broader set of participants’ products and services across multiple currencies and assets.
“Malaysia is moving in the same direction. SC’s recent engagement with licensed institutions around stablecoin issuance reflects a proactive stance — recognising that stablecoins will be essential infrastructure, even if regulated under different statutes,” the white paper noted.
With a market value of US$167 billion, Tether has emerged as the largest stablecoin and the fourth-largest digital asset globally, just after Bitcoin (US$2.26 trillion), Ethereum (US$506.3 billion) and XRP (US$170.6 billion), according to Coingecko data.
USDC, valued at US$67.8 billion, is another stablecoin that has made it to the top 10 digital assets list.
Nonetheless, there are concerns about the booming stablecoin market, as stablecoins could be exploited as a new tool for fraudulent activities and create greater risks to the financial system. As such, a more comprehensive framework is needed to safeguard the interests of all stakeholders.
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