Dollar-Pegged Stablecoins Fuel U.S. Treasury Demand — Japan and South Korea Race to Launch Local Alternatives

TradingKey – As the supply of U.S. dollar-backed stablecoins surges, Japan and South Korea are accelerating efforts to develop their own yen- and won-based stablecoins, aiming to keep pace with global digital currency trends.

On August 19, Bank of Korea Governor Rhee Chang-yong reiterated his support for a Korean won stablecoin, stating:“A won-backed stablecoin is necessary, but the smarter approach is to introduce it through banks first, then expand gradually.”

In early July, the Bank of Korea established a new Virtual Asset Division, tasked with leading internal discussions on stablecoin strategy and digital asset policy.

South Korea’s four major banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, and Woori Bank — are actively preparing to issue stablecoins. According to local reports, executives are expected to meet with Circle (CRCL) CEO Heath Tarbert later this month to explore potential partnerships and compliance frameworks.

Japan is also making rapid progress. On August 17, the Financial Services Agency (FSA) granted JPYC, a local stablecoin issuer, a license as a “Funds Transfer Service Provider.” This paves the way for the launch of Japan’s first compliant yen-backed stablecoin, expected in October.

Since President Trump signed the GENIUS Act on July 18, the supply of dollar-pegged stablecoins has surged, triggering a spike in demand for U.S. Treasuries, which back these tokens. Treasury Secretary Scott Bessent has openly praised the trend, calling it a “win-win” for users, issuers, and the government.

The standout performer is USDe, a yield-bearing stablecoin whose circulating supply grew 70% in just one month, surpassing $10 billion. As of today, USDe’s market cap stands at $11.4 billion, ranking third globally, behind USDT and USDC.

Top 5 Stablecoins by Market Cap – Source: CoinMarketCap