Non-USD stablecoin replaces central bank-led digital currency worldwide

Non-US dollar-denominated stablecoins are replacing central bank digital currency (CBDC) projects around the world, according to analysis by Compliance Corylated. Several private entities have signalled they are planning “strategic moves” into the stablecoin market, while central banks have stepped back from their CBDC initiatives.

While the European Commission is still deciding on the future of a digital euro, South Korea is gaining attention from international stablecoin issuers such as Tether and Circle, after the countryʼs central bank suspended its retail CBDC project last week.

The US moved in a similar direction with its bill to ban the Federal Reserve from issuing a CBDC. At a meeting of the Senate Banking Committee with Federal Reserve chair Jerome Powell, Republican senator Bernie Moreno said the ban was necessary to ensure the US did “not look like China” with its CBDC, known as e-CNY.

Andrew MacKenzie, founder and CEO of UK institutional stablecoin issuer Agant, told Compliance Corylated: “We will likely see CBDCs in the future, though they’ll likely take different forms depending on the region.

“It makes sense for central banks to modernise and digitalise their infrastructure — and in doing so, they’ll effectively create their own version of a CBDC. That said, I think the private sector is far better and faster at driving innovation.”

MacKenzie emphasised that stablecoins provide the market with “a choice” that in theory, should always lead to the “most efficient and effective solutions”.

He added that the trend away from CBDCs also reflected public perception. “The optics of a digital asset coming from a government body are very different from those of one created by a private company. People are generally more comfortable using platforms like Facebook than they would be using a government-run version of the same service.”

Spotlight on South Korea

In the Asia-Pacific (APAC) region, South Korea’s digital assets market has experienced legislative tailwinds since President Lee Jae-myung took office in June.

A week after Leeʼs inauguration, his Democratic party proposed the Digital Asset Basic Act, which addressed stablecoin reserve requirements. One of its key provisions includes lowering stablecoin issuers’ minimum equity capital to Won500 million, which is expected to reduce barriers to enter the digital assets market.  

Meanwhile, the Bank of Korea (BoK) has reportedly suspended the pilot for its CBDC project, according to Bloomberg. Project Han River was a peer-to-peer payment trial conducted through the CBDC network; the project originally planned to enter its second pilot phase in October.

The BoK previously said, in its 2022 consultation: “Through public-private collaboration and experimentation, the Bank of Korea’s pilot will facilitate a deeper understanding of technical issues, and of the policy and regulatory implications. The pilot is a testament to the key role that CBDC might play as a monetary anchor in such a future ecosystem.”

However, the CBDC project allegedly faced “resistance” from participating retail banks, who are looking to issue their own stablecoins, according to multiple South Korean news outlets.

Foreign players join the race

Local banks are not the only ones eyeing the South Korean market. Two senior executives from the world’s biggest stablecoin issuers — El Salvador-based Tether and US-based Circle — visited the country last week.

Tether CEO Paolo Ardoino claimed to have meetings with BoK’s governor during the trip, while Circle president Heath Tarbert told Yonhap News that he had also met with “exchanges, banks, payment companies and other traditional businesses for whom stablecoins could help with cross-border sales and transactions”.

Circle also backed Japanʼs yen-denominated stablecoin, JPYC, which is awaiting final regulatory approval as of August 28.

US-based crypto exchange Coinbase is also looking for international “compliant and trustworthy” stablecoin issuers in South Korea, Japan, Thailand, Iraq, Vietnam, India, Pakistan, Malaysia and Egypt, according to its post on X.

“Over the last few years, we’ve seen builders create products, grow communities, and drive real use for local currencies. But there’s more ground to cover,” said Coinbase.

US-China: opposed approach

In the US, a bill to ban the Federal Reserve from issuing a CBDC passed the US House during Julyʼs “Crypto Week”. The Anti-CBDC Surveillance State Act was shoe-horned into a “must-pass” military bill, the National Defense Authorization Act, and is expected to become law by September.

The bill mainly prohibits Federal Reserve banks from issuing a CBDC or “any digital asset that is substantially similar under any other name or label”. Testifying before the Senate Banking Committee in February, Powell was asked to commit to the US “never having a CBDC”, to which he agreed.

Meanwhile, China has moved in the opposite direction with its e-CNY, a retail CBDC operated by the People’s Bank of China (PBoC), it acts as a “digital version” of cash and does not bear any interest. It was officially launched in 2022, following the increasing adoption of privately owned digital payment ecosystems such as Alipay and WeChat Pay.

“[The e-CNY] is designed not only to modernise China’s fiat currency, but also to extend the Chinese Communist Party’s regulatory oversight into the digital realm, and strengthen its control over the domestic monetary system,” said Monique Taylor, lecturer at the University of Helsinki, in a paper published on August 22.

Speaking at Lujiazui Forum in June, former PBoC governor Zhou Xiaochuan further highlighted that public and private digital currencies present both opportunities and risks. “Central bank digital currencies and stablecoins are thriving, making possible the simultaneous processing of payment and settlement. It, however, has also posed great challenges to financial regulation,” he said.

After the implementation of Hong Kong’s stablecoin law on August 1, Chinese tech giants JD.com and Ant Group are reportedly seeking stablecoin licences, according to Reuters.

EU’s pending decision

The digital euro is another large-scale CBDC project, aiming to cover retail payments across the 27 EU member states. According to the European Committee’s statement on August 26, the project is currently in the “preparation phase”, which began in November 2023, and is set to end this year.

The commission is looking to draft the digital euro rulebook, select platform providers, and carry out testing and consultations to ensure high standards of quality, security, privacy and usability, it said in the statement. The next discussion on digital euro will be held on September 4, 2025.

While the European authorities are developing the digital euro, US issuer Circle is already establishing dominance in the region through its euro-backed stablecoin, EURC.

On Circleʼs website, it claims the EURC complies with the EU Markets in Crypto-Assets (MiCA) regulation and is backed 100% by its euro reserves, which are “held at regulated financial institutions in the EEA” with monthly reports.

The EURC also received approval from the Dubai International Financial Centre (DIFC) as a recognised crypto token. With this approval, financial firms and fintechs in the DIFC can now use EURC for payments, managing funds and other financial services.

UK as an ‘outlierʼ

In the UK, the spotlight on digital currencies has shifted towards “tokenised deposit projects” between high street banks and the Bank of England (BoE). Appearing at a parliamentary inquiry before the Treasury Committee on July 22, BoE governor Andrew Bailey highlighted that these tokenised deposit projects are his current priority, as “they are where our money lies”.

When asked if the BoE is abandoning its CBDC project, “Britcoin”, Bailey added that if the tokenised deposit with commercial banks proves successful, he would question “why we would need to introduce a new form of money”.

In an interview with The Times, Bailey also stated that the BoE would need to examine stablecoins closely from the perspective of “financial stability and monetary implications”.

However, Agantʼs MacKenzie noted: “The role of banks in global and tokenised finance is quite different from that of stablecoin issuers. I believe there’s room for both to operate effectively.

“Stablecoins aren’t deposits. They’re bearer instruments, which means they can be transferred more easily than a traditional bank deposit. I see this as a complementary relationship — it’s not a case of either/or.”