Stablecoins are challenging Asia’s financial order

StraitsX CEO Liu Tianwei says: "The single largest use case for us is in cross-border payments like inbound tourism spending. There are many e-wallets, and many aren't interoperable—a tourist in Singapore with a Touch 'n Go or Alipay wallet cannot scan a PayNow QR code."

To address this, he describes a network which lets tourists use their own wallet and pay in their native currency. That amount is instantly settled in XSGD, while the merchant still prices and receives payment in Singapore dollars.

"We can then settle in the back end so that the merchant receives Singapore dollars, without either the consumer or merchant needing to touch a stablecoin directly," he adds. But others are less optimistic about taking on the domestic retail payments sector with local currency-pegged stablecoins."

But the technology of stablecoin itself isn't revolutionary, notes Dr Charoenwong. "It's about market discipline - this is similar to how fintech forced traditional banks to improve mobile banking and reduce fees,” he explains.

Liu agrees. “The narrative around fintech was that it would disrupt banks, but instead we’ve seen more innovation developing because fintech is around.” Stablecoin, therefore, is a “modernising force” for traditional banking and payment rails, he believes. “A lot of the work in stablecoin requires banks to be heavily involved.”

Sure enough, banks such as Standard Chartered are already exploring tokenisation and stablecoin payments, enabling more risk-averse traditional finance players to enter such transactions. Standard Chartered’s global head of digital assets Rene Michau notes that clients are increasingly turning to the lender to help them enter and transact in digital or crypto assets.