A Defining Moment for Digital Money

14 May 2025

By Gabriel Lee

The global financial ecosystem is at a digital inflection point. With the rise of programmable money, tokenized assets, and digital public infrastructure, stablecoins now sit at the heart of the conversation around the future of money. As we gather at the Point Zero Forum—where public and private leaders align around responsible innovation—stablecoins provide a lens to explore how we can balance regulatory integrity, financial inclusion, and global interoperability.

GFTN’s mission to build trusted digital financial networks is uniquely positioned to advance the dialogue around stablecoins, not as isolated crypto instruments, but as integrated elements of the next-generation financial architecture. The challenge ahead lies in developing frameworks that unlock stablecoin utility while ensuring safety, resilience, and alignment with public policy objectives.

The Current State: From Experiment to Infrastructure

Stablecoins, particularly those pegged to the US dollar, have rapidly grown in both volume and relevance. They now settle billions of dollars in transactions daily, bridging traditional finance and blockchain-based ecosystems. Their utility—instant settlement, 24/7 availability, programmability, and low friction—has caught the attention of payment companies, remittance providers, and even governments.

Yet this growth has raised complex questions. Who issues stablecoins? How are they backed? Can they be trusted as digital public infrastructure? The answers vary depending on geography.

• In the US, regulation is moving from ambiguity to clarity. The Clarity for Payment Stablecoins Act, introduced in 2023, has set a trajectory toward licensing regimes, reserve requirements, and strict audit disclosures—especially for dollar-backed stablecoins like USDC and PayPal USD.
• In the EU, the Markets in Crypto-Assets (MiCA) regulation, coming into full effect in 2024–2025, sets clear guardrails for "e-money tokens," positioning regulated stablecoins within the larger European monetary framework.
• In Asia, jurisdictions like Singapore and Hong Kong are taking a nuanced approach, encouraging innovation while implementing tightly controlled pilots and licensing for stablecoin issuers.
• Emerging markets, especially in Africa and Latin America, are increasingly viewing stablecoins as tools for circumventing capital controls, mitigating currency volatility, and expanding financial access.

Looking Ahead to the Next 2–3 Years:

(a) Mainstream Adoption Will Accelerate—Especially in Retail and Emerging Markets

Retail adoption of stablecoins is already visible in parts of Latin America, Southeast Asia, and Sub-Saharan Africa. In countries with national currencies subjected to fluctuating or volatile conditions, dollar-backed stablecoins are becoming de facto savings tools. We will see integrations with neobanks, wallets, and even social media platforms—embedding stablecoins into the everyday user experience.

(b) Regulatory Clarity Will Favor Institutional-Grade Stablecoins

As regulators draw distinctions between payment or fiat-backed stablecoins and algorithmic or loosely collateralized versions, the market will consolidate around stablecoins with transparent backing and regulatory compliance. We’ll see a bifurcation: on one side, fully regulated, fiat-backed stablecoins used for payments and settlements; on the other, permissionless DeFi-native stablecoins continuing to serve crypto-native users.

The Rise of Non-USD Stablecoins

Today, over 90% of stablecoin volume is denominated in U.S. dollars. However, in my opinion, this dominance is not inevitable. The coming years will see credible euro-, yen-, and real-backed stablecoins emerge—driven by both policy incentives and geopolitical recalibration. Regional payment systems (like Brazil’s Pix or India’s UPI) could integrate stablecoins to enhance cross-border remittances. One possibility to have this come through may be for central banks to partner with regulated issuers to distribute tokenized e-money under public-private models. A multipolar stablecoin ecosystem would enable a more resilient, localised financial ecosystems.

Challenges and Opportunities in Digital Money

Despite the momentum, hurdles remain. Regulatory fragmentation, risks of misuse (e.g., money laundering or sanctions evasion), and technical vulnerabilities are real concerns. But with the right frameworks and forums that encourage public-private dialogues such as the Point Zero Forum and Insights Forum, I expect the conversation around stablecoins to move rapidly ahead. Stablecoins can become a core component of modern financial infrastructure—particularly as cross-border payments remain costly, slow, and opaque.

Here, there are opportunities abound for FinTechs, banks, and even central banks to collaborate with stablecoin issuers to build compliant, high-utility digital money systems. The winners will be those who can marry regulatory integrity with seamless user experience.

Stablecoins are no longer just a technological curiosity—they are fast becoming the connective tissue between today’s financial system and tomorrow’s. The next two to three years will determine whether they become safe, scalable tools for the digital economy—or remain siloed and fragmented. Regulation, innovation, and trust will be the pillars of this new phase.

For policymakers, entrepreneurs, and financial institutions alike, this is the moment to shape the future of digital money—not just react to it.

*Gabriel Lee is the Head of Customer Success and a founding team member at GFTN, where he focused on fostering public-private sector collaboration to drive growth in the digital economy. His career spans key roles at the Monetary Authority of Singapore, InfoComm Asia, and Business China. Views expressed are his own.