• Stablecoins enter rapid multi-year global expansion phase
• Banks prepare to defend deposits with tokenisation
• Japan showcases government-backed stablecoin economic innovation
• Settlement layers promise seamless cross-asset digital payments

Global regulators continue to question how digital assets will reshape monetary authority, yet developments in Japan show a different path. The country now uses stablecoins such as JPYC for government bonds and stimulus programs.

These moves illustrate how blockchain-based assets can reinforce national strategies rather than challenge central bank authority. Japan’s approach signals a shift in how governments may use digital currencies to strengthen economic sovereignty. It also shows that stablecoins can fit into regulated environments without disrupting monetary oversight.

This shift comes at a time when several financial institutions confront rapid changes in payment technology. Digital assets have entered the dialogue that, in the not-too-distant past, was strictly about traditional banking. With growing adoption, it creates a challenging environment where innovation and regulation need to adapt in tandem.

Also Read: Why Crypto Adoption Is Surging in High-Inflation Economies in 2025: Report

Stablecoin Super Cycle Reshapes Capital Flows

With the financial sector in transition, a “super cycle” in stablecoins is emerging, according to Aishwary Gupta, the Global Head of Payments and RWA at Polygon. In Gupta’s perspective, the increase in stablecoins can be associated with the rising need to make use of digital payment means that work without boundaries and with less friction than traditional means. In fact, there could be over 100,000 issuers in about five years.

The expected surge creates pressure on banks that rely heavily on low-interest deposits. With the growing number of savers opting for online financial alternatives that have attractive rates of return, there is less and less liquidity in regular savings accounts. Gupta notes that banks need to take prompt measures to fall back in such a competitive marketplace where digital financial assets are competing head-to-head with conventional savings arrangements.

Deposit Tokens Strengthen Banks’ Digital Position

Banks now explore new tools to retain funds while supporting the flexibility customers expect. One technology that can help banks retain money while at the same time giving consumers the freedom they want, so that they can conduct transactions on all exchanges and platforms, including the use of blockchain technology, is through the creation of deposit tokens.

As stablecoin numbers rise, there will also be a need for payment systems to handle the issue of fragmentation. This can easily be provided by neutral settlement layers. The networks support instant conversion between stablecoins, so the individual asset itself does not matter.

Also Read: XRP Reserves Fall to 2.7 Billion on Binance Amid Rising U.S. ETF Activity