Why Asian banks are quietly taking over crypto

Across Asia, the headlines say the same thing: governments are finally opening the doors to crypto. But look a little closer, and a different story appears. The real winners of this new wave of regulation are not retail traders or crypto-native startups. It’s the banks.

Japan, Hong Kong, and South Korea are all reshaping their crypto rules at the same time. They’re not just legalizing trading—they’re rebuilding the plumbing so that traditional institutions can own the rails that crypto runs on. And they’re doing it while retail interest is cooling and capital is rotating into AI and semiconductors.

Japan: from “speculative asset” to financial instrument

Japan has made the biggest structural move, even if it’s not getting the loudest headlines. On April 10, the government approved an amendment to the Financial Instruments and Exchange Act (FIEA)—the same law that governs stocks and bonds.

For the first time, crypto assets in Japan are being treated as financial instruments rather than just payment tools. That sounds technical, but it changes almost everything about how crypto fits into the financial system.

What Japan actually changed

By pulling crypto under the FIEA, Japan is applying the same standards used for traditional securities:

• Insider trading rules now apply: Trading on non-public information about a token can be prosecuted like insider trading in stocks.

• Mandatory disclosures for issuers: Projects that issue tokens will need to provide regular, standardized information to the market.

• Much tougher penalties: Maximum prison terms jump from 3 to 10 years, and fines rise from 3 million to 10 million yen for serious violations.

On top of that, Japan is completely overhauling how crypto is taxed. Currently, crypto gains are treated as miscellaneous income, with tax rates that can climb as high as 55%—more than double the rate on listed shares.

Under the reform, crypto gains would be taxed at a flat 20.3%, with a three-year loss carry-forward. That puts crypto on the same footing as stocks and makes it far more attractive for long-term, regulated investors.

The real goal: clearing the way for spot crypto ETFs

Reclassifying crypto as a financial instrument is not just about fairness or clarity. It’s the legal prerequisite for spot crypto ETFs.

You can’t wrap an asset in a regulated ETF unless the law recognizes it as a financial instrument. Japan has now laid that groundwork, and institutions are already lining up.

SBI Holdings, a major Japanese financial group and Ripple’s largest external shareholder, has already filed for spot Bitcoin and XRP ETFs. It’s targeting around 5 trillion yen (roughly $32 billion) in assets under management within three years of launch. In practice, that would mean a Japanese pension fund could buy an XRP ETF the same way it buys Toyota stock.

This is a clear signal: Japan is rebuilding crypto as regulated infrastructure that banks, insurers, and pension funds can plug into.

The catch: this will take years

There is one important reality check. Cabinet approval is not the same as law. The bill still needs to pass Japan’s Diet (parliament), and the reforms are not expected to fully take effect until fiscal 2027.

For individual traders, the friendlier flat tax likely won’t kick in until January 2028 at the earliest. So this is not an overnight change—but the direction is clear. Japan is methodically turning crypto into an institutional-grade asset class.

If you want to dig deeper into how Japan’s moves tie into XRP and cross-border payments, it’s worth reading this breakdown of Japan’s yen stablecoin push and its impact on Ripple and XRP.

Hong Kong: a velvet rope for bank-backed stablecoins

Hong Kong looks, at first glance, like it’s throwing the doors wide open to stablecoins. Its new stablecoin regime came into full effect in August 2025, and dozens of companies rushed to apply for licenses to issue regulated stablecoins.

But when the first approvals arrived on April 10, the reality was very different.

Only two licenses out of 36 applicants

Out of 36 companies that applied for an issuance license, the Hong Kong Monetary Authority (HKMA) approved just two—an approval rate of about 5.6%.

And those two winners were not scrappy crypto startups:

• Anchor Point: A joint venture led by Standard Chartered, Hong Kong’s dominant telecom HKT, and Animoca Brands.

• HSBC: One of the world’s largest and most established banks.

In other words, Hong Kong has created a velvet rope system. The stablecoin regime exists, but the only ones allowed through (for now) are the same incumbents that already run the traditional financial system.

The HKMA has been open about this. Officials have said that additional licenses will be “very limited” and that they prefer a “test first, expand later” approach. Translation: let the banks go first, see how it goes, and only then consider letting others in.

Hong Kong as a controlled outlet for Chinese demand

Here’s where it gets even more interesting. Research firm Bernstein estimates that by 2027, Hong Kong could capture 65–75% of Chinese crypto demand.

That implies a very specific political setup: mainland China keeps its formal ban on crypto in place, while Hong Kong becomes a tightly managed, deniable on-ramp for Chinese capital. The channel exists—but it’s under full control.

You can see that control in what Hong Kong has rejected. Major firms like JD.com and Ant Group explored issuing yuan-backed stablecoins. But after directives from Beijing in October 2025, both suspended those plans.

The HKMA even issued its first enforcement warning under the new rules against a company marketing an offshore yuan stablecoin without a license. Hong Kong is fine with a Hong Kong dollar stablecoin run by HSBC. A yuan stablecoin that might compete with China’s digital yuan? That’s a hard no.

The message is clear: Hong Kong is building a state-managed gate for crypto capital, and Beijing is holding the keys.

South Korea: banks buying the exchanges as retail exits

South Korea shows the clearest picture of who these new “floodgates” are really for. Instead of just building rules and waiting for institutions to use them, Korean banks are buying the infrastructure outright.

Banks taking stakes in Upbit’s operator

In late May 2026, three Samsung affiliates moved to take a combined 4% stake in Dunamu, the company behind Upbit, Korea’s dominant crypto exchange. That deal was worth around 612.8 billion won (about $480 million).

Hana Bank went even further, taking a 6.55% stake for close to 1 trillion won (around $670 million). That makes one of Korea’s largest lenders a top-five shareholder in the country’s largest exchange.

Other major financial players—Hana, Mirae Asset, Korea Investment and others—are also buying into exchanges at valuations implying Dunamu is worth more than $10 billion.

Instead of just offering crypto services to customers, these institutions are becoming part-owners of the core trading infrastructure.

Retail traders are leaving as institutions move in

The timing is the twist. All of this institutional buying is happening while Korean retail traders are stepping away from crypto in a big way.

In December 2024, Korean crypto trading volume hit 323% of the entire KOSPI stock market’s turnover. Crypto was trading at more than three times the volume of the national stock exchange.

By 2026, that figure had collapsed to around 8%. The total amount of crypto held by Korean investors nearly halved—from 121.8 trillion won at the start of 2025 to 60.6 trillion won by February 2026.

Where did that money go? Largely into AI and semiconductor stocks. The KOSPI’s price-to-earnings ratio jumped sharply, and Samsung Electronics alone gained more than 50%, briefly touching a trillion-dollar market cap. Retail investors rotated their capital into chip and AI plays.

So the picture looks like this: the banks are buying the casino at the exact moment the gamblers are cashing out and heading across the street to the stock market.

And tougher rules are coming

South Korea is not exactly making life easier for the crypto industry either. A 22% tax on crypto gains is scheduled to take effect in January 2027, and the finance ministry has confirmed it’s moving ahead despite a repeal petition that gathered 50,000 signatures in just eight days.

On top of that, a proposed rule change could explode compliance requirements. The industry body DAX has warned that exchange reporting obligations could jump from around 63,000 reports a year to over 5.4 million—an 85x increase that exchanges say is simply unworkable.

In other words, Korea is tightening the screws on exchanges and traders while banks quietly buy into the platforms themselves.

The hidden layer: a settlement war across Asia

Underneath all of this—Japan’s legal overhaul, Hong Kong’s stablecoin licenses, Korea’s bank investments—sits a deeper story: a quiet war over settlement rails.

Settlement is the boring but crucial part of finance: it’s how money actually moves between businesses, banks, and across borders. And in Asia, governments are starting to see stablecoins and tokenized assets as a way to reshape that layer—and reduce their dependence on the US dollar.

Japan’s yen stablecoin ambitions

On June 1, 2026, the ruling LDP’s blockchain panel in Japan formally urged the government to promote yen stablecoins for settlement across Asia. Lawmaker Yuichi Kaneda said it directly: they want yen stablecoins used for cross-border settlement in the region.

This isn’t just talk. Japan’s three megabanks—MUFG, SMBC, and Mizuho—are studying a joint stablecoin issuance. And Japan already settles roughly 40–50% of its trade with Asia in yen.

Yen stablecoins would be a logical next step: a way to push more trade and settlement into yen while using crypto rails for speed and efficiency.

Korea’s won-backed stablecoin plans

Korea is running a similar play. Eight Korean banks, including KB Kookmin, Shinhan, and Woori, are working on a shared won-backed stablecoin for payments and settlement.

The Bank of Korea has insisted that only bank-majority consortiums can issue such a stablecoin. That requirement alone tells you who is meant to control the rails: banks, not startups.

Hong Kong and the yuan question

Hong Kong’s rejection of yuan stablecoins fits into the same pattern. While the city is open to Hong Kong dollar stablecoins run by big banks, it has shut the door on private yuan stablecoins that might compete with China’s official digital yuan.

Each of these moves—yen stablecoins, won stablecoins, tightly controlled HKD stablecoins—is part of the same regional contest. Countries are trying to plant their flag in the settlement layer and reduce their reliance on dollar-based rails.

The problem: the dollar still dominates stablecoins

There’s one big issue with this de-dollarization push: the numbers are still overwhelmingly in the dollar’s favor.

Non-USD stablecoins make up less than 0.5% of the entire stablecoin market. The US dollar accounts for roughly 93% of all stablecoin supply—and by some measures, more than 99% of actual usage.

So far, the “settlement war” is mostly aspirational. Asian governments and banks want to build their own rails, but in practice, dollar stablecoins still dominate real-world usage.

That said, the prize they’re fighting for is huge. Asia already handles around 60% of global stablecoin payment volume, with an estimated $245 billion a year in real-economy settlement. Whoever controls the rails for that flow has enormous leverage.

It’s no accident that Kraken agreed to put up to $600 million into acquiring Reap, a Hong Kong-based firm focused on stablecoin payments and cross-border settlement in the Asia-Pacific region. Smart money is quietly buying up the infrastructure where the real value lives.

If you’re interested in how this fits into the broader fight over stablecoins and the dollar, you may also want to read this analysis of how big banks are positioning themselves around crypto and stablecoins.

Why this is happening during a market downturn

One of the most striking parts of this story is the timing. All of this institutional plumbing is being laid during a relatively quiet period for crypto.

Bitcoin is trading well below its previous all-time highs. Crypto venture funding has fallen sharply as investors pour money into AI instead. Retail enthusiasm in key markets like Korea has cooled, with capital rotating into semiconductor and tech stocks.

That’s exactly when the establishment tends to move. Banks and large institutions prefer to build and buy during the quiet parts of the cycle, when valuations are lower and competition is weaker.

In effect, they watched an entire generation build crypto infrastructure in the open—and are now buying into that infrastructure at a discount.

What this means for everyday crypto users

So is Asia “opening the floodgates” bullish or bearish for regular crypto users? The answer is nuanced.

On one hand, institutional adoption brings legitimacy, deeper liquidity, and more robust infrastructure. Spot ETFs, regulated stablecoins, and bank-backed rails can make it easier for large pools of capital—like pension funds and insurers—to enter the market.

On the other hand, the way this is happening suggests that much of the upside in infrastructure and settlement may be captured by banks and incumbents, not by early crypto-native players. The rules are being written in a way that favors big balance sheets, compliance teams, and political connections.

For individual users and investors, a few practical takeaways stand out:

• Watch Japan’s legislative process: The FIEA reform, tax changes, and any spot ETF approvals all depend on the bill passing the Diet. Fiscal 2027–2028 are the key dates.

• Keep an eye on SBI and XRP: If a spot XRP ETF is approved in Japan, it could become a template for other Asian regulators and a major milestone for XRP’s institutional use.

• Monitor Hong Kong’s license count: If the HKMA keeps licenses limited to banks, the “velvet rope” thesis holds. If crypto-native issuers start getting approved, the game may be shifting.

• Track non-USD stablecoin growth: If any yen, won, or HKD stablecoin breaks above that 0.5% market share ceiling, it will be a real sign that the de-dollarization push is gaining traction.

• Understand your counterparty risk: If you hold crypto through exchanges or wrappers in these markets, bank ownership of the rails is now part of your risk profile—whether you like it or not.

The big question: who will own crypto in Asia?

Asia’s new crypto wave is not a simple story of “more freedom” or “more adoption.” It’s a story of control.

Japan is turning crypto into regulated financial infrastructure so that traditional institutions can own it through familiar channels. Hong Kong is building a tightly managed stablecoin regime that favors banks and aligns with Beijing’s priorities. Korea’s lenders are buying into exchanges just as retail traders walk away.

Underneath it all, governments and banks are fighting to own the settlement rails that money flows through—using stablecoins and tokenized assets as the tools.

Whether this is ultimately bullish or bearish for the average crypto user depends on your perspective. It could be the moment when the deepest pools of capital finally commit and build the rails for the next decade of growth. Or it could be the moment when the establishment captures the infrastructure, leaving smaller players on the wrong side of the gate when the next bull market arrives.

Either way, one thing is clear: if you care about the future of crypto in Asia, you can’t just watch prices. You need to watch who owns the pipes.