Inside the race to win Southeast Asia's stablecoin transformation

Across Southeast Asia, stablecoins are rapidly becoming financial infrastructure. The question is which currencies will power it: US dollar tokens that already dominate the market, or a growing crop of local-currency alternatives.

On payday in Jakarta, 28-year-old Erika Yuliani Lukmawati doesn't wait for an international transfer to clear. A trained accountant, she receives payment for a web3 side gig through Bitget Wallet, settled in USDT on the BNB Chain, "since it's the most liquid and lowest-fee option," she says. Her most recent outgoing payment from the self-custodial wallet was for lunch: the merchant received Indonesian rupiah instantly, with a fee close to zero. 

Before switching in 2025, Erika told The Node she relied on Wise and PayPal for international transfers. Settlement took around three days, she says, "plus the fees were high and had a bad rate conversion FX"... worse if a payment landed on a weekend. Now the money lands in seconds. She splits it on arrival: about half is converted to Indonesian rupiah through a local exchange, a portion is kept for spending, and the rest is moved to a wallet she treats as dollar savings.

Erika's integration of stablecoins into her daily financial life is part of a much larger shift: Southeast Asia's crypto industry is rapidly turning into a payments industry. The region of 700 million people is where the world will first see what a stablecoin economy actually looks like.

Nations like Singapore, Vietnam, Thailand, the Philippines, and Indonesia make a natural proving ground: fragmented currencies, large underbanked populations, and some of the world's largest remittance corridors.

But the same shift that liberates Erika from high transfer fees and long waits is also giving the US dollar a stronger foothold in local economies. With the USDC and USDT dollar tokens dominating the market and local-currency versions, such as the Philippine peso's PHPC and Singapore dollar's XSGD, struggling to gain traction, governments are wary of an erosion of monetary sovereignty. At the same time, regulators are having to play catch-up with a system that citizens have already adopted.

Grassroots growth 

Global stablecoin payment volume roughly doubled in 2025, to an estimated $390 billion, according to McKinsey. Asia as a whole accounts for 60% of that total, far ahead of North America and Europe. The ASEAN region, led by Singapore, is powering a significant part of that growth. 

More significant is the type of use that’s becoming predominant in Southeast Asia – real grassroots crypto adoption by people like Erika rather than financial trading. Chainalysis ranked Vietnam #4, Indonesia #7 and the Philippines #9 in the world for grassroots adoption in its 2025 Geography of Crypto Index.

In the Philippines, stablecoins are becoming financial plumbing — flowing through everyday apps like GCash, moving over $50 million a day on Coins.ph, and delivering overseas wages in minutes.

Wei Zhou, the CEO of Coins.ph and former CFO of Binance, said the big two dollar tokens are developing distinct user bases. “USDT is the go-to for retail users, Web3 gamers, and sending money friend-to-friend because it’s everywhere and cheap to move on networks,” he said. USDC, meanwhile, is “winning over companies and institutions” because its regulatory and transparency credentials make compliance teams more comfortable moving larger sums.

Across the region, stablecoins are increasingly moving from exchanges to the point of sale for millions of consumers.

Naqib Noor, a 38-year-old  father of two children, used USDC held on a crypto-linked credit card to help buy an SUV from a Singapore dealership in March 2025. The transaction was little different from an ordinary card purchase: he took out the card and swiped it to cover a down payment of more than $40,000 on the car.

For Noor, a crypto industry professional, the motivation was less about speed or cost than simply spending the assets he already owned. “I have more crypto than fiat,” he said. “I needed the fiat to pay bills and debts that I have, so I try not to touch my fiat.”

“Way back it was so hard to even use crypto for anything outside of Web3,” he said. Would he buy another car this way? “Yes, 100%.”

In the same month as Noor’s car purchase, the Philippines' dominant e-wallet GCash integrated Circle's USDC into its GCrypto feature, allowing users to swap pesos for a dollar stablecoin directly within the app most Filipinos already use for daily payments. 

Late in 2025, Southeast Asia's largest “super-app” Grab signed an MOU with Singapore digital payments firm StraitsX to explore Web3 wallets and a stablecoin settlement layer. Consumers can now use stablecoins to make everyday payments at thousands of GrabPay merchants, following a tie-up with crypto exchange OKX.

Much of Southeast Asia runs on remittances – a vast opportunity for crypto rails. The Philippines alone pulled in a record $35.6 billion from overseas workers in 2025, about 8–9% of GDP. Vietnam and Indonesia take in over $16 billion each per year.

A tie-up announced in November 2025 between Coins.ph and the UK’s BCRemit allows Filipinos working in the Europe, the US, and Canada to send stablecoin payments to their family members’ Coins.ph wallet. The funds arrive in minutes rather than days and at a cost saving of around 80%, according to the firms.

From traders to treasury teams

Stablecoins are increasingly being used by ordinary businesses for payments and treasury operations, rather than predominantly by crypto traders moving money around during market activity.

One sign this shift is structural, not cyclical, is who's asking the questions now. Renna Ba, director of partnerships at stablecoin infrastructure provider Morph, has watched inbound interest change. 

"Two years ago, stablecoin interest came from traders and remittance platforms," she said. "Now we're getting inbound leads from treasury teams, payment processors, and businesses that had no experience with crypto before."

Inquiries have matured too. They now focus on "settlement finality, audit trails, and uptime," Ba said. Settlement volume climbs through quiet price periods, she added, "because it's tied to trade flows and payment schedules, not market sentiment."

SB Seker, head of Asia-Pacific at Binance, sees regulation rather than demand as the constraint. “The demand side of the economy is there, but the supply side is lacking, because the regulatory framework for these activities is not that mature in a lot of markets,” he told The Node.

The dollar’s headstart

Ask almost anyone building stablecoin infrastructure in the region and you get the same answer: USDT and USDC got there first, and their lead has proved hard to dislodge.

Paul Kim, founder and chairman of New Frontier Partners Group, has watched several Asian countries struggle to build alternatives. The core problem, he said, isn't technical. Liquidity begets liquidity. "Policymakers may want to issue a ringgit or won-backed stablecoin and see it used globally, but the real challenge is getting global market participants to accept it as a settlement currency. Someone still has to buy it."

According to Tiger Research’s 2026 Asia Stablecoin Market Overview,¹ USDT and USDC together account for roughly 99% of the stablecoin market in the region. 

Ben Charoenwong, associate professor of finance at INSEAD, argues the dollar's advantage is structural, not merely first-mover. "A stablecoin is a commodity: every USDC is identical to every other USDC, so competition comes down to where it is accepted at par and how deep the book is. That is a pure network-effect market."

Underneath the market-share fight sits a harder policy question. What happens to a country's monetary sovereignty if the dollar quietly becomes the settlement currency of choice for its own domestic economy?

"It's a real concern, not a hypothetical one,” says Ba. 

The numbers don't support panic yet: global stablecoin volume was around $35 trillion in 2025, against roughly $2 quadrillion in total payments.² That’s less than 2% of the volume of payments globally.

Ba stresses that not all dollarisation is equal: "A business settling a cross-border invoice in USD stablecoin isn't dollarizing its economy any more than it was when it settled that invoice in USD wire transfers before stablecoins existed. The risk is concentrated in domestic, retail-facing use."

Where local currency coins can win

In the Philippines, this plays out daily. Workers abroad send USDT or USDC to recipients who convert to pesos through Coins.ph, Zhou told The Node, while companies use dollar stablecoins to pay overseas suppliers and remote workers

But dollar stablecoins do not necessarily remain in domestic circulation. Zhou said people mainly use them as a bridge for transfers or as a store of value rather than to pay for groceries or bills. Taxes, rent and utilities remain denominated in pesos.

That leaves a potential role for peso-backed stablecoins, provided they connect to domestic payment rails such as QRPh, develop sufficient liquidity and are integrated into high-volume services such as remittances and gaming. Zhou expects USDT and USDC to remain dominant for cross-border transfers, while peso-backed tokens could handle more domestic payments, with apps converting between the two.

“I don’t think it’s a competitive frame,” Angela Ang, APAC managing director at BitGo, told The Node. “Local-currency stablecoins are solving a different problem: settlement finality and FX bridging for domestic commerce, not global liquidity.”

XSGD illustrates the distinction. Through StraitsX's GrabPay integration in Singapore, overseas visitors pay from their existing wallets while merchants receive Singapore dollars — the stablecoin working behind the scenes as FX and settlement.

Charoenwong is less convinced. He points to a natural experiment: StraitsX issues both XSGD and a dollar-pegged token, XUSD, from the same regulated entity.

"Same issuer, same regulator, same chains, same distribution. Yet the dollar-denominated token has attracted greater demand. Hold everything constant except the denomination and the dollar wins anyway. That is a demand problem, not a policy problem." Singapore's own banking efficiency undercuts the case further, he argued: "DBS could just accept USDC and convert you to fiat SGD right away, without the need for XSGD."

Ba is more precise about which domestic use cases pull local-currency demand: payroll, merchant settlement, and pilots "where a foreign-currency instrument creates regulatory friction such as capital controls or monetary sovereignty." 

There's a cost argument too: "Adopting local-currency stablecoins not only addresses settlement speed, it also prevents FX leaks,” she said.

For Ba, infrastructure readiness, not appetite, is the real constraint on stablecoin adoption more broadly. Regulatory clarity is the big one. "Compliance and legal teams won't sign off on ambiguity,” she said. Banking integration is another, since converting to usable fiat still runs through relatively few partners, and finance teams still lack a clear answer on how to book stablecoin holdings

Most overlooked, Ba said, is counterparty readiness: "If suppliers can't receive it and customers won't pay with it, there's no pull to adopt even where the licensing is clear."

Singapore: The institutional anchor

Singapore is building the institutional plumbing the rest of the region increasingly plugs into.

StraitsX, licensed by the Monetary Authority of Singapore (MAS) as a Major Payment Institution, issues XSGD. It’s the first and only Singapore dollar-pegged stablecoin the MAS has acknowledged as substantively compliant with its Single-Currency Stablecoin framework, alongside XUSD. Both have processed more than $18 billion in combined onchain volume.

Ba calls Singapore's framework the most consequential regulatory development in the region, because it has replaced ambiguity with a testable checklist: reserve backing, redemption rights, disclosure standards. That clarity lets issuers like Paxos and Circle join the framework on top of their existing licenses.

Institutional rails are the other half of the play: Partior, the cross-border settlement network backed by Temasek, DBS, J.P. Morgan and Standard Chartered, shows that banks are building their own tokenised settlement rails rather than relying on public stablecoins.

Thailand and Indonesia: Regulating an existing reality

Thailand and Indonesia show a more common pattern: regulators racing to formalise a dollar-stablecoin economy that businesses and users had already built for themselves.

Thailand's Securities and Exchange Commission officially approved USDT and USDC for use in digital asset transactions in March 2025, allowing licensed exchanges to use them as base trading pairs –  a recognition of existing usage rather than an attempt to seed a new one. That has come with tightening scrutiny: the Bank of Thailand and the SEC have opened a joint investigation into large USDT transactions that may be structured to circumvent disclosure and remittance rules, and from Q4 2026, customers depositing more than five million baht (roughly $140,000–$150,000) in cash will need to document the source of funds. The central bank is separately finalising its own baht-backed stablecoin for interbank settlement.

Indonesia seems to be taking a more structural approach: its financial services authority, the OJK, assumed oversight of crypto markets from the commodities regulator in 2025, treating digital assets as financial instruments rather than commodities. Usage there is mostly driven by hedging against rupiah depreciation and by fragmentation across roughly 17,000 islands, which creates banking barriers that stablecoins bypass.

Indonesia still classifies stablecoins as an investment instrument rather than a legal payment method. When Erika receives her income, she immediately swaps around half of the USDT into rupiah for everyday expenses, triggering a 0.21% tax on the crypto sale. She keeps the remainder in USDT for spending and saving.

Asked if she'd go back to bank transfers, however, she doesn't hesitate: "No, I'd still choose stablecoins. They're easy for transactions, especially cross-border ones. Plus, you only need a wallet address with no other data required."

What decides the winner

Rather than a single model emerging as a winner, market players see the USD vs. local-currency stablecoin balance being determined over time by use cases and habits. 

"I don't think this ends with one model displacing the other,” said Ba. “There's a good chance it ends with a split based on whether the transaction crosses a border. USD-backed stablecoins will remain dominant for cross-border and trade use cases, because that's already how trade is priced and settled in the region." 

Technology may no longer be the deciding factor. The bigger test is whether local-currency issuers can build enough liquidity and trust to secure their domestic markets before dollar stablecoins become the region's default settlement layer. By then, the contest may already have been decided by habit.

For Erika, that shift is already part of everyday life. Easier payments have even changed her behaviour. “I’ve become more of a spender,” she said, laughing. “But on the bright side, it actually motivates me more to work, since I’m earning income in dollars and stablecoins.”

By Tanzeel Akhtar

Sources

¹ Tiger Research. 2026. "2026 Asia Stablecoin Market Overview." Tiger Research.

² McKinsey & Company. 2025. "Global Payments Report." McKinsey & Company.