Paul Brody, a Global Blockchain Leader at EY, talks about the stablecoins in Asia and what's driving the regulatory push in this region.

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Paul Brody, Global Blockchain Leader at EY, notes that while mainland China maintains strict controls on cryptocurrencies, Hong Kong is emerging as a progressive leader in stablecoin legislation. Brody highlights that over 99% of global stablecoin transactions are currently U.S. dollar-based, but forecasts a decline in this dominance as more countries implement their own stablecoin policies.

He emphasizes the importance for non-U.S. countries to develop local currency-based stablecoins to maintain control over capital flows and financial sovereignty. Brody also points out that stablecoins are increasingly used for cross-border payments, offering significant cost and speed advantages over traditional banking systems.

Geopolitical competition driving push for stablecoins: Expert

What is your main takeaway. I mean do you see a major regulatory shift around a stable coin in China. I do certainly in Hong Kong. Right. In mainland China crypto currencies have generally been not allowed. And in addition to that pretty much anything sort of derived off or built on top of these crypto ecosystems hasn't been allowed either. That potentially might change in the future. China's obviously had a very successful pilot program with the digital renminbi within the domestic environment. And you can see that Hong Kong is taking a good lead both in terms of the general legislation and some of the detailed rules that are being published. It's very progressive and it's it's very up to date compared to what's going on in the rest of the region and the U.S. market. And one of the guests that we were just listening to from our recent interview touched on this as well. But China has very tight control on its capital flows. And there is also potential surveillance concerns as well. So this potential lack of trust perhaps in Yuan based stable coin. Do you see that happening as well compared to what the dollar is based on. So there's a big element of geopolitical competition going on right now. Today 99 percent more than 99 percent is active. All stable coin transactions in the entire world are U.S. dollar based. Now our own forecast says that within by about 2030 that's going to fall to maybe 70 percent. That assumes that governments will have implemented policies which allow people to transact subtle trade and that businesses are adopting this technology. So my expectation is that that that dollar dominance will decrease. But it's still very strong and very very strong. And of course the market is just growing much much larger with stablecoin legislation. Now in the U.S. the European Union has this covered. You've got Singapore Japan South Korea and Hong Kong. So almost every major global market has some form of stablecoin legislation. And in most cases that covers both local currency stable coins and U.S. dollar denominated stable coins. How is it. How important is it for non-U.S. countries to have their own currency based stable coins. I think it's going to become very important if you look at Tether. They're a good example. I think I've seen estimates that say they're about the seventh largest holder of U.S. government bonds in the entire world. So if you think about all of those people out there in the world like buying lots and lots of U.S. dollars and that's feeding into U.S. banking system it's feeding into demands for the U.S. dollar it's buying U.S. Treasury bonds. If you are not in that cycle if your government doesn't have their own stable coin and people are not buying your government bonds you could find the market for your capital and the ability to manage capital in your country to be diminished. And of course the provisions in the U.S. regulation that give the government extraterritorial power they can work both ways. Other governments can do the same thing. But that means that you have to have the stable coin is denominated or sort of managed inside the four walls of your own country. Paul Martin here. Let me quickly jump in with a question. You mentioned Tether and this is a really interesting factor. Seventh largest holder of U.S. treasuries. I did not know that which kind of leads me to another question I have with stable coin. I mean on the surface it sounds like almost a perfect commodity. Right. But with stable coin balances right. Unless you can offer or be able to show a yield. What's it going to be good for you know. So right now the value proposition around stable coins is heavily driven by payments especially cross-border payments. You know we've seen data. We know for a fact that you can basically cut your transmission your payment transmission cost by about ninety nine percent by shifting from traditional banking and wire transfers into a stable coin environment that costs almost nothing and also settles almost immediately. So we're already seeing companies and individuals looking at adopting it for these low cost cross-border payments. When we think about scaling that up we see big implications for how governments are going to manage their receive big information about how companies are going to manage their cash on a global basis.

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