As the conversation around digital assets gets popular in Southeast Asia, Thailand is mulling over the possibilities of a stablecoin backed by government bonds to explore new payment-use cases.
According to a report, the plan piqued the interest of top-ranking Thai officials, with Finance Minister Pichai Chunhavajira giving the nod to the project. The Thai Baht stablecoin is expected to debut in Q4 following a phased pilot program involving asset-backed tokens.
While details on the stablecoin remain sparse, pundits argue that the offering will be used to complement efforts to make government bonds accessible to a broader demographic of investors. The government specifically targets retail investors to limit the market share controlled by financial investors.
“The government issues a large number of new bonds each year, but they primarily end up in the hands of financial institutions,” said Chunhavajira. “We want to make these bonds more accessible to individual investors.”
To achieve this, Thailand will tokenize its government bonds and deploy them to back the stablecoin offering. To underscore its commitment to even the odds between private investors and financial institutions, the government is eyeing the development of a secondary market platform for trading the stablecoin.
While the Finance Ministry and the central bank are expected to collaborate on the offering, the Public Debt Management Office has been tapped to spearhead the platform’s operations.
Per Chunhavajira, the goal is to elevate the stablecoin to a mainstream payment alternative. Chunhavajira unveiled plans to link existing platforms to the incoming platforms to broaden its application for daily payments.
The Minister clarified that the issuance will not affect the stability of the baht, noting that the launch will create no new funds. However, it is important to note that the regulatory framework for the government bond-backed stablecoin remains unknown for the Southeast Asian country.
A central bank’s skepticism
In January, multiple reports emerged that digital assets were inching toward their official debut in Phuket, but the Bank of Thailand (BoT) continues to eye the asset class with skepticism.
BoT Governor Sethaput Suthiwartnarueput described the asset class as “unstable,” noting that the use cases must be clear before the central bank adopts the technology. In July 2024, the country previously turned to digital assets to distribute $14 billion for citizens to boost its flailing economy amid fears of stoking inflation.
“The government needs to spend money on its urgent policies to help boost the economy, and it can’t wait for the funding for the next fiscal year,” said Prime Minister Srettha Thavisin in defense of the policy at the time.
Stablecoin market capitalization soars to as USDT falters
Meanwhile, the global market capitalization for stablecoins has soared to a new all-time high of $217 billion at the start of February.
Data from DefiLlama says that the total stablecoins market cap clinched the $217.3 billion mark, climbing by 0.88% over the last week. Per the data, Tether‘s (USDT) dominance over the stablecoin market stands at 64.46%, rising by nearly 2% since the start of the year.
A closer look at the chart reveals that USDC is gaining significant ground with its impressive 17.71% growth over a month. Despite the growth spurt, the market cap for USDC stands at $53.3 billion, paling in comparison to USDT’s $139.9 billion.
There appears to be a direct correlation between USDC’s rise and the recent altcoin dip with USDC trading pairs reaching record highs for daily trading volumes.
Ethena USDe (USDe), Dai (DAI), and First Digital USD (FDUSD) occupy third, fourth, and fifth place, respectively, maintaining single-digit growth levels over a 30-day time frame. Sky Dollar (USDS) appears to be the biggest gainer in the same period, adding a staggering 55% to its market capitalization.
Despite the impressive growth, stablecoins lost a portion of their market share to other digital asset classes, with DefiLlama pegging the decline to 13.5%. Several theories rationalize the loss of market share, including a waning interest in digital asset trading in the third quarter of 2024.
On the other hand, stablecoin volumes continue to surge upwards, making up 92.64% of the total digital asset 24-hour volume. Over the last 12 months, the sector’s total volume surpassed the combined values of Visa (NASDAQ: V) and Mastercard (NASDAQ: MA) by an impressive 7.7%.
“Stablecoins experienced a surge in both supply and volume following the post-election spike in crypto activity, surpassing Visa and Mastercard by over two and three times, respectively, in Q4 alone,” said CEX.io lead analyst Illia Otychenko.
Poised for even bigger growth
Experts predict stablecoins will expand more in 2025, increasing their market share and institutional adoption. One report predicts the rise of regulated stablecoins with banks wading to offer issuers custodial services.
Stablecoins linked to local currencies may gather significant steam in 2025. Already, the United Arab Emirates (UAE) and Thailand are mulling over the idea with the launch of the EU’s Markets in Crypto Assets (MiCA), laying the foundation for a shift from dollar-based stablecoins.
Watch: Blockchain is much more than digital assets
title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>
