When State Banks Start Issuing Stablecoins...

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast; Simon Taylor of Fintech Brainfood and Pet Berisha of Sporting Crypto.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

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Simon’s Market Readout 💬 

The centre of gravity for stablecoins is tilting East - not away from the dollar, but toward dollar rails operated by Asian financial institutions.

Three threads are converging: a) a state-backed Chinese bank moving to issue via Hong Kong’s new regime, b) Korea’s largest banks exploring won-representative stablecoins with dollar backing for cross-border flows, and c) emergent dollar access products for emerging-market diasporas.

The common denominator isn’t speculative crypto; it’s trade finance meeting 24/7 settlement.

Three strategic considerations for institutions:

1. Bank issuance in Hong Kong signals a new baseline for counterparty risk:

A state-backed Chinese bank operating through Hong Kong, with roughly $430 billion in assets, is applying for a stablecoin license under Hong Kong’s new framework. That reframes stablecoins from “third-party token risk” to “bank product with on-chain settlement,” which aligns with corporate treasury policies and audit expectations.

2. Korea’s model points to local-currency Won UX with dollar collateral

Korea is a global export engine – think of giants like Samsung, car makers like Kia. Yet too often payments still route through New York or London before finding their way to Africa or Southeast Asia. Korean banks are exploring stablecoins that feel like Won to users, but settle in dollars for speed and reach.

It’s a simple idea that fits how supply chains actually operate: familiar currency at the edge, global liquidity at the core. The policy signal is clear: build rails that work for trade, not the other way around.

3. The diaspora use case explains the demand pull

Picture a freelancer in Cairo or a small business selling online to Europe. The correspondent model is expensive, slow and often unavailable. An Egyptian “borderless account” aimed at the diaspora shows what people actually need: dollar balances, instant settlement, invoicing, a debit card - all delivered over stablecoin rails.

That’s not speculation; that’s making a living possible across borders.

So where does this go from here?

SWIFT did the world a favour in the 1970s by standardizing messages and cutting error rates, but the network still reflects centuries-old trade gravity centred on Europe and the Atlantic.

Asia is moving first on bank‑led rails, with targeted corridor pilots likely to appear where friction is highest: Hong Kong ↔ India, Korea ↔ Africa, etc. The near-term path isn’t a big-bang rewrite; it’s proving that these rails can carry real trade. We need programmable compliance, 24/7 liquidity, and finality, not batch windows and a chain of intermediaries. If that holds, the market will sort itself: banks bring balance sheets and trust; platforms bring distribution; interoperability makes it all feel like one network.

I really, truly wonder if the role of the dollar is going to start to change. And with it, the backing of the “stablecoin dollar.” Because trade can’t wait. This new form of trade needs a new form of money. The growth markets aren’t waiting for the correspondent banking system or SWIFT to modernize. They’re just building.

Stories You Can't Miss 📰

🏛️ When China's Biggest Bank Wants to Issue Stablecoins…

Bank of China Hong Kong (BOCHK), a $430 billion state-backed institution wants to issue digital dollars. This has the potential to be incredibly significant as a formal embrace of stablecoins by the Chinese-state-backed banking system.

Key Points:

• BOCHK is reportedly pursuing Hong Kong's stablecoin issuer license - the first major state bank to formally enter digital asset infrastructure

• The news sent BOC shares surging 6.7% as markets

• Applications for Hong Kong’s stablecoin full license are due by Sep 30, 2025:

• Hong Kong's regulatory framework creates clear compliance pathways that traditional institutions can actually navigate

• This directly challenges the Tether-Circle duopoly with something corporate treasuries have been waiting for: a government-backed alternative

The Tokenized Take:

When a state-backed bank with nearly half a trillion in assets decides stablecoins are critical infrastructure rather than speculative tech, pay attention. China has historically avoided or banned anything crypto related. But in Hong Kong, Tether and stablecoins are a part of everyday life, and cross-border trade routes. Those routes are becoming increasingly difficult due to tariffs, sanctions and the traditional correspondent banking system’s failings..

The regulatory unlock: Hong Kong launched its comprehensive stablecoin ordinance on August 1 and is accepting applications through September 30.

This highlights Hong Kong's bet on becoming the institutional crypto hub Expect similar moves from major banks in other clear-framework jurisdictions within 6-12 months, because nobody wants to be the last traditional institution to build stablecoin infrastructure.

🚀 Korean Banking Giant Kakao Bank Launches Cross-Border Stablecoin Infrastructure

Kakao Bank is partnering to launch cross-border stablecoin payment infrastructure, joining the growing ranks of traditional banks building blockchain-based treasury solutions.

Key Points:

• Kakao Bank (serving 19 million customers) is building cross-border stablecoin infrastructure as part of Korea's pivot away from CBDCs

• The Bank of Korea halted its CBDC project in June 2025, instead backing legislation to legalize private stablecoin issuance

• Eight major Korean banks are forming a consortium to launch won-pegged stablecoins by early 2026

• This follows President Lee Jae-myung's pro-crypto stance and represents a complete reversal from previous government skepticism

The Tokenized Take:

This is a result of another story that didn’t get enough attention: Korea scrapped its central bank digital currency program in favour of letting private banks issue stablecoins.

This is bigger than just Kakao Bank launching cross-border payments. This is a fundamental policy shift that could influence the global CBDC vs stablecoin debate.

The implications are fascinating for other nations weighing CBDC vs stablecoin strategies.

Korea's model suggests governments can maintain monetary sovereignty while letting private sector innovation handle the technology infrastructure and user experience.

This could become the template for countries that want digital currency benefits without the technical and political complexity of CBDCs.

💸 M0 Secures $40M to Build Institutional Stablecoin Network

Crypto startup M0 raised $40 million to develop institutional-grade stablecoin infrastructure, highlighting continued VC confidence in the sector despite broader market volatility.

Key Points:

• Instead of issuing another stablecoin, M0 creates interoperability infrastructure that enables seamless transfers and swaps between different stablecoins

• CEO Luca Prosperi: "We cannot have 1,000 different Tethers and Circles" - so they built a layer where different issuers can connect

• Focus on institutional treasury management features that not all stablecoins may have: programmable compliance, automated reporting, enterprise-grade custody

• M0's network focuses on programmable money and automated treasury management, enabling institutional-grade features that current stablecoin implementations lack.

The Tokenized Take:

Stablecoin fragmentation is the messy reality people avoid saying out loud. As banks, payment firms and even countries issue their own digital dollars, we risk a maze of coins that do not talk to each other.

M0's Chief Strategy Officer Joao Reginatto told us the uncomfortable truth on the Tokenized Podcast in July: "We see this at M0 every day... a new use case where somebody wants to build their own digital dollar form factor, their own stablecoin, and you just can't stop that."

So instead of fighting this inevitable, M0 built technology that enables customization without fragmentation. They're "rethinking money issuance from first principles" with the goal of "how do we get the dollar to run on the internet" rather than just building another token pegged to the dollar.

Here's the insight that explains some of their success: You can't stop businesses from wanting their own digital money, but you can build the infrastructure that makes all these custom digital currencies interoperable. M0 focuses on "how do you construct authorizing issuance of money on-chain, coordination of those processes on-chain" - which looks completely different from how first-generation stablecoins were built.

Think about email in the 1990s: every company had their own system until protocols emerged that made them interoperable. M0 is building the SMTP for money, enabling enterprises to use any stablecoin without worrying about which blockchain it's on or which issuer created it.

The timing is perfect. While everyone debates whether we need more stablecoins, M0 recognized that businesses will create them anyway. Their nearly $100 million in total funding positions them to be the connectivity layer that makes institutional stablecoin adoption actually practical rather than just possible.

💳 Rain Raises $58M to Power Stablecoin Financial Services for Global Platforms

Even though Airbnb, Amazon and Facebook Marketplace have millions of global users, they struggle to offer their users proper financial services across jurisdictions. This highlights a massive infrastructure gap. Rain just raised $58 million Series B to fill it, by building the API layer that makes stablecoin financial services globally accessible.

Key Points:

• $58 million Series B led by Sapphire Ventures, bringing total funding to $88.5 million just 5 months after their Series A

• Transaction volume grew 10x in 2025, now serving 1.5+ billion people through partnerships with platforms like Nuvei, Avalanche and Dakota

• Became a Visa Principal Member in March 2025, enabling direct card issuance on Visa's network

• Tokenizes credit card receivables, enabling per-swipe lending entirely on blockchain infrastructure

• Partners can offer stablecoin-powered financial services globally "with a single API: connect once, sign one commercial agreement, and you go where we go"

The Tokenized Take:

Rain identified one of the biggest platform economy's biggest infrastructure gaps: How do you offer financial services to global users when traditional banking partnerships require separate deals in every market?

CEO Malik's insight from our July podcast: Major platforms "didn't really have financial partners to provide financial products around their global customer base." Rain's solution is building the middleware that connects platforms to stablecoin financial services without requiring them to become financial institutions themselves.

The result is revolutionary capital efficiency. As Malik explained: "We can actually turn around and borrow that money from our capital partners and then settle that money with Visa entirely on the blockchain" with "repayments from clients actually on the blockchain so the lenders get repaid automatically."

This $58 million highlights the platform enablement thesis. Instead of competing with global platforms, Rain enables them to provide bank-like services without becoming a licensed bank. With stablecoins providing "dollar utility and dollar access to people around the world" through a single integration, Rain positioned itself at the intersection of platform aggregation and financial inclusion.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Google’s Rich Widmann describes Universal Ledger blockchain plans (Read more here)

• PetroChina Charts a New Course in Global Trade Using Stablecoins (Read more here)

• Ant is using Kinexys by JP Morgan for real time FX blockchain settlement (Read more here)

• OCBC launches $1 billion blockchain commercial paper program (Read more here)

• JAPAN POST BANK considers launching tokenized deposits (Read more here)

• Tron Network Fees Slashed After Vote—Here's What to Expect (Read more here)

• Crypto Exchanges to List Trump-Linked World Liberty Token (Read more here)

• US Trading App Webull Launches Crypto Service in Australia to Challenge Incumbents (Read more here)

• 'Know Your Issuer': This Tech Combats Counterfeit Coins, Starting With USDC and PYUSD (Read more here)

• CFTC to Surveil Crypto, Prediction Markets Using Nasdaq Platform (Read more here)

🤑 Funding and M&A

• Crypto industry on pace to break 2021 fundraising record (Read more here)

• Nasdaq-Listed Crypto Exchange Group Coincheck Buys Regulated Prime Broker Aplo (Read more here)

• Jump Trading Alums Raise $20M for aPriori to Bring High-Frequency Trading Tools On-Chain (Read more here)

💼 Government & Policy

• US Dept of Commerce to publish GDP data on blockchain (Read more here)

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