BIX ARTICLE
The future of digital payments
Aug 26, 2025
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9 min read
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— Reuters
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STABLECOINS, a form of cryptocurrency is reshaping global finance. The fast revolution of digital technology is changing the payments landscape.
In an era of rising geopolitical fragmentation and rapid digital innovation, stablecoins have emerged a driver of change in enhancing the efficiency of payments, especially crossborders.
The cryptocurrency market has achieved a new milestone, with its total market value exceeding US$4 trillion for the first time on July 18, driven by a wave of renewed optimism, clearer regulatory framework in key markets and growing participations from institutional investors, reflecting its transition from a niche investment to a significant component of the global investment landscape.
The passage of the US stablecoin bill, which aims to regulate these dollar-pegged cryptocurrencies, has boosted investors’ confidence and encouraged institutional investment.
Similar efforts to provide clarity in other jurisdictions, such as the European Union and the United Kingdom, have also contributed to the positive sentiment.
Big techs and financial technology firms have entered financial services using platform-based technology to facilitate payments, providing a practical and efficient alternative to the traditional banking system for payments and remittances.
Stablecoins are crypto tokens issued on distributed ledgers technology namely “on-chain” aiming to maintain a stable value relative to a traditional asset, typically pegged to a fiat currency such as the US dollar. This is achieved by offering convertibility on demand at par.
Stablecoins are inherently different from non-backed crypto assets like bitcoin and ether, which are issued in their own denominations without any financial or monetary backing, lack both intrinsic value and redeemability, and are especially volatile.
Stable value
Stablecoins are a form of digital money that connect the volatile cryptocurrencies with traditional financial systems, aiming to maintain a stable value which can minimise price volatility, and make them more suitable for payment.
They are appealing because they offer the benefits of blockchain technology, such as global transferability and liquidity, while providing a stable and solid store of value, making them suitable for everyday transactions.
Stablecoins are issued by private issuers/entities, generally fall into three primary categories: Fiat-collateralised, backed by a reserve of fiat currency for example the US dollar or commodity-backed stablecoins like gold or oil.
The stablecoin’s value is theoretically equivalent to the value of the fiat currency held in reserve. Examples include tether or USDT and USD Coin or USDC; Asset-collateralised, backed by assets such as commodities or cryptocurrencies.
They often require overcollateralisation, meaning more cryptocurrencies are held in reserve than the value of the stablecoin, to account for potential price fluctuations; and algorithmic stablecoins, which maintained their peg to a reference asset through automated mechanisms, like adjusting the coin’s supply based on demand, rather than through physical collateral.
Many central banks across the globe are currently working on a public alternative: central bank digital currency (CBDC), which would be a digital form of fiat money, designed to be a safe and efficient means of payment and store of value, backed by a sovereign government and central bank.
Medium of exchange
As a safe and liquid asset, CBDC can be used as a medium of exchange either for retail transactions (general purpose, for use by households and businesses) or wholesale transactions for use by financial institutions.
Many foreign governments have enacted stablecoin regulations, including Switzerland in 2019, Japan in 2022, Singapore in 2023, the United Arab Emirates in 2024, and Hong Kong in 2025.
Rising number of countries are considering CBDCs, but how are they different from cryptocurrencies and stablecoins?
The main difference between CBDCs and cryptocurrencies is that CBDCs are issued and backed by a central bank, giving consumers guaranteed protection, although some concerns remain around data protection and online privacy.
The CBDC tracker (source: Atlantic council) indicated that as of July, 72 countries are in the advanced phase of exploration -- development, pilot, or launch. There is a new high of 49 CBDC pilot projects around the world.
Bahamas, Jamaica and Nigeria have fully launched a digital currency, focusing on expanding the reach of their CBDCs domestically.
CBDC adoption
Emerging markets are at the forefront of global retail CBDC adoption to reduce cash usage, expand financial inclusion, and improve regulatory oversight.
This push is also a response to the increasing prevalence of dollar-backed stablecoins in international transactions.
Some major central banks have pushed for the adoption of CBDC to advancing towards the internalisation of their currencies.
The European Central Bank is advancing a “global euro moment” as it pilots the digital euro, aiming to strengthen the euro’s international role.
Digital yuan (e-CNY) is still the largest CBDC pilot in the world.
In June 2024, total transaction volume reached seven trillion e-CNY (US$986bil) in 17 provincial regions across sectors such as education, healthcare, and tourism. This figure is nearly four times the 1.8 trillion yuan (US$253bil) recorded by the People’s Bank of China in June 2023. India’s e-rupee is now the second-largest CBDC pilot.
Digital rupee in circulation rose to 10.16 billion rupees (US$122mil) by March 2025, up 334% from 2.34 billion rupees (US$28mil) in 2024. In 2025, the Reserve Bank of India is expanding both retail and wholesale CBDCs with new use cases, offline functionality, and broader participation.
While Malaysia does not currently have any major asset-backed stablecoins, there are growing interest and development in the area.
The recent launching of a digital asset innovation hub and ongoing CBDC explorations by Bank Negara Malaysia (BNM), focusing on stablecoins and other digital assets, signals a move towards exploring and potentially regulating their use.
Furthermore, some stablecoin projects, like MYRC (a Malaysian ringgit stablecoin) and HelloGold (a gold-backed token), have been explored in the past, but their widespread adoption or continued operation is not widely publicised.
Relatively small
Malaysia’s crypto asset market, while active, remains relatively small compared with the broader financial market.
As of the end of 2024, the cumulative net deposit outflow from banks to domestic registered Digital Asset Exchanges (DAX) crypto assets represented less than 1% of total banking system deposits and about 0.4% of the market capitalisation of securities listed on Bursa Malaysia.
Despite this, the trading volume of cryptocurrencies in Malaysia has been increasing, reaching RM13.9bil in 2024, up from RM5.4bil in 2023.
In Malaysia, while crypto assets are not illegal, they are not recognised as legal tender and not regulated as a means of payment as well as not subject to the same regulations as traditional currencies.
Nevertheless, they are being regulated by the Securities Commission under specific guidelines for digital assets, which treats them as securities for regulatory purposes.
Their volatile nature makes them unsuitable for use as a medium of exchange (used for payments), unit of account (for setting prices of goods and services), or store of value (can be saved, retrieved, and exchanged at any time).
While Bank Negara Malaysia (BNM) does not have any immediate plans to issue CBDC, we must recognise the potential of the digital currencies’ transformation and innovation which will necessitate the central bank to become proactive in exploring digital currencies as a safe and highly efficient payment and settlement platform.
In this regard, BNM has commenced a multi-year CBDC exploration through a proof of concept (PoC) with three phases: Phase one (cross-border wholesale CBDC), phase two (domestic wholesale CBDC); and phase three (domestic retail CBDC).
The PoC represents an important first step of our journey of digital currencies innovation to identify the potential benefits of CBDC tailored to our economic and financial landscape, to examine how CBDC could be integrated into our existing payments system to address some of the key challenges facing our financial sector to gather insights from users and merchants to understand their needs and expectations and to assess the operational and infrastructural requirements for scaling up to a broader usage.
Stablecoins present a double-edged sword for financial sovereignty. They offer significant opportunities to modernise domestic currencies and enhance payment efficiency. Yet these potential benefits can only be realised if significant risks are addressed.
Various international financial bodies like the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) have identified multifaceted challenges and risks associated with stablecoins, irrespective of their size.
These issues span a wide range, from legal uncertainty, sound governance and financial crime (such as money laundering, terrorist financing and other forms of illicit finance) to operational risks, market integrity concerns, and the need for robust investors’ protection and data privacy measures.
One of the big questions for consumers is an understanding how they work and for businesses, to understand how to adopt either bitcoin or stablecoins as a payment and settlement method.
For many businesses, cryptocurrencies are unfamiliar territory. They are being perceived not as complex but also as risky too. There is a growing generational gap in stablecoin and cryptocurrency familiarity, with older generations like baby boomers generally exhibiting lower familiarity with these emerging digital financial assets.
A phased approach to piloting CBDC is appropriate as it allows the central bank to assess technological resilience, address privacy and security concerns, evaluate users’ adoption and their familiarity, and ensure interoperability with existing financial systems.
The use of controlled environments like regulatory sandboxes to gradually live testing and potential large-scale implementation.
A CBDC is seen by many as a way forward to modernise payment systems, improve financial inclusion, secure monetary sovereignty, and provide a digital alternative to physical cash.
CBDC has three advantages: Enhancing efficiency by reducing reliance on physical cash and intermediaries, faster and efficient crossborder payments, potentially lower transaction costs associated with cash handling and distribution, and provide a stable digital alternative to cash.
It enhances security and financial stability by providing a secure platform for transactions, reducing the risk of counterfeiting and fraud as well as promoting financial inclusion by offering a digital payment option accessible to individuals and businesses, in both urban and remote areas.
Lee Heng Guie is the executive director of the Socio-Economic Research Centre. The views expressed here are the writer’s own.
In an era of rising geopolitical fragmentation and rapid digital innovation, stablecoins have emerged a driver of change in enhancing the efficiency of payments, especially crossborders.
The cryptocurrency market has achieved a new milestone, with its total market value exceeding US$4 trillion for the first time on July 18, driven by a wave of renewed optimism, clearer regulatory framework in key markets and growing participations from institutional investors, reflecting its transition from a niche investment to a significant component of the global investment landscape.
The passage of the US stablecoin bill, which aims to regulate these dollar-pegged cryptocurrencies, has boosted investors’ confidence and encouraged institutional investment.
Similar efforts to provide clarity in other jurisdictions, such as the European Union and the United Kingdom, have also contributed to the positive sentiment.
Big techs and financial technology firms have entered financial services using platform-based technology to facilitate payments, providing a practical and efficient alternative to the traditional banking system for payments and remittances.
Stablecoins are crypto tokens issued on distributed ledgers technology namely “on-chain” aiming to maintain a stable value relative to a traditional asset, typically pegged to a fiat currency such as the US dollar. This is achieved by offering convertibility on demand at par.
Stablecoins are inherently different from non-backed crypto assets like bitcoin and ether, which are issued in their own denominations without any financial or monetary backing, lack both intrinsic value and redeemability, and are especially volatile.
Stable value
Stablecoins are a form of digital money that connect the volatile cryptocurrencies with traditional financial systems, aiming to maintain a stable value which can minimise price volatility, and make them more suitable for payment.
They are appealing because they offer the benefits of blockchain technology, such as global transferability and liquidity, while providing a stable and solid store of value, making them suitable for everyday transactions.
Stablecoins are issued by private issuers/entities, generally fall into three primary categories: Fiat-collateralised, backed by a reserve of fiat currency for example the US dollar or commodity-backed stablecoins like gold or oil.
The stablecoin’s value is theoretically equivalent to the value of the fiat currency held in reserve. Examples include tether or USDT and USD Coin or USDC; Asset-collateralised, backed by assets such as commodities or cryptocurrencies.
They often require overcollateralisation, meaning more cryptocurrencies are held in reserve than the value of the stablecoin, to account for potential price fluctuations; and algorithmic stablecoins, which maintained their peg to a reference asset through automated mechanisms, like adjusting the coin’s supply based on demand, rather than through physical collateral.
Many central banks across the globe are currently working on a public alternative: central bank digital currency (CBDC), which would be a digital form of fiat money, designed to be a safe and efficient means of payment and store of value, backed by a sovereign government and central bank.
Medium of exchange
As a safe and liquid asset, CBDC can be used as a medium of exchange either for retail transactions (general purpose, for use by households and businesses) or wholesale transactions for use by financial institutions.
Many foreign governments have enacted stablecoin regulations, including Switzerland in 2019, Japan in 2022, Singapore in 2023, the United Arab Emirates in 2024, and Hong Kong in 2025.
Rising number of countries are considering CBDCs, but how are they different from cryptocurrencies and stablecoins?
The main difference between CBDCs and cryptocurrencies is that CBDCs are issued and backed by a central bank, giving consumers guaranteed protection, although some concerns remain around data protection and online privacy.
The CBDC tracker (source: Atlantic council) indicated that as of July, 72 countries are in the advanced phase of exploration -- development, pilot, or launch. There is a new high of 49 CBDC pilot projects around the world.
Bahamas, Jamaica and Nigeria have fully launched a digital currency, focusing on expanding the reach of their CBDCs domestically.
CBDC adoption
Emerging markets are at the forefront of global retail CBDC adoption to reduce cash usage, expand financial inclusion, and improve regulatory oversight.
This push is also a response to the increasing prevalence of dollar-backed stablecoins in international transactions.
Some major central banks have pushed for the adoption of CBDC to advancing towards the internalisation of their currencies.
The European Central Bank is advancing a “global euro moment” as it pilots the digital euro, aiming to strengthen the euro’s international role.
Digital yuan (e-CNY) is still the largest CBDC pilot in the world.
In June 2024, total transaction volume reached seven trillion e-CNY (US$986bil) in 17 provincial regions across sectors such as education, healthcare, and tourism. This figure is nearly four times the 1.8 trillion yuan (US$253bil) recorded by the People’s Bank of China in June 2023. India’s e-rupee is now the second-largest CBDC pilot.
Digital rupee in circulation rose to 10.16 billion rupees (US$122mil) by March 2025, up 334% from 2.34 billion rupees (US$28mil) in 2024. In 2025, the Reserve Bank of India is expanding both retail and wholesale CBDCs with new use cases, offline functionality, and broader participation.
While Malaysia does not currently have any major asset-backed stablecoins, there are growing interest and development in the area.
The recent launching of a digital asset innovation hub and ongoing CBDC explorations by Bank Negara Malaysia (BNM), focusing on stablecoins and other digital assets, signals a move towards exploring and potentially regulating their use.
Furthermore, some stablecoin projects, like MYRC (a Malaysian ringgit stablecoin) and HelloGold (a gold-backed token), have been explored in the past, but their widespread adoption or continued operation is not widely publicised.
Relatively small
Malaysia’s crypto asset market, while active, remains relatively small compared with the broader financial market.
As of the end of 2024, the cumulative net deposit outflow from banks to domestic registered Digital Asset Exchanges (DAX) crypto assets represented less than 1% of total banking system deposits and about 0.4% of the market capitalisation of securities listed on Bursa Malaysia.
Despite this, the trading volume of cryptocurrencies in Malaysia has been increasing, reaching RM13.9bil in 2024, up from RM5.4bil in 2023.
In Malaysia, while crypto assets are not illegal, they are not recognised as legal tender and not regulated as a means of payment as well as not subject to the same regulations as traditional currencies.
Nevertheless, they are being regulated by the Securities Commission under specific guidelines for digital assets, which treats them as securities for regulatory purposes.
Their volatile nature makes them unsuitable for use as a medium of exchange (used for payments), unit of account (for setting prices of goods and services), or store of value (can be saved, retrieved, and exchanged at any time).
While Bank Negara Malaysia (BNM) does not have any immediate plans to issue CBDC, we must recognise the potential of the digital currencies’ transformation and innovation which will necessitate the central bank to become proactive in exploring digital currencies as a safe and highly efficient payment and settlement platform.
In this regard, BNM has commenced a multi-year CBDC exploration through a proof of concept (PoC) with three phases: Phase one (cross-border wholesale CBDC), phase two (domestic wholesale CBDC); and phase three (domestic retail CBDC).
The PoC represents an important first step of our journey of digital currencies innovation to identify the potential benefits of CBDC tailored to our economic and financial landscape, to examine how CBDC could be integrated into our existing payments system to address some of the key challenges facing our financial sector to gather insights from users and merchants to understand their needs and expectations and to assess the operational and infrastructural requirements for scaling up to a broader usage.
Stablecoins present a double-edged sword for financial sovereignty. They offer significant opportunities to modernise domestic currencies and enhance payment efficiency. Yet these potential benefits can only be realised if significant risks are addressed.
Various international financial bodies like the Bank for International Settlements (BIS) and the Financial Stability Board (FSB) have identified multifaceted challenges and risks associated with stablecoins, irrespective of their size.
These issues span a wide range, from legal uncertainty, sound governance and financial crime (such as money laundering, terrorist financing and other forms of illicit finance) to operational risks, market integrity concerns, and the need for robust investors’ protection and data privacy measures.
One of the big questions for consumers is an understanding how they work and for businesses, to understand how to adopt either bitcoin or stablecoins as a payment and settlement method.
For many businesses, cryptocurrencies are unfamiliar territory. They are being perceived not as complex but also as risky too. There is a growing generational gap in stablecoin and cryptocurrency familiarity, with older generations like baby boomers generally exhibiting lower familiarity with these emerging digital financial assets.
A phased approach to piloting CBDC is appropriate as it allows the central bank to assess technological resilience, address privacy and security concerns, evaluate users’ adoption and their familiarity, and ensure interoperability with existing financial systems.
The use of controlled environments like regulatory sandboxes to gradually live testing and potential large-scale implementation.
A CBDC is seen by many as a way forward to modernise payment systems, improve financial inclusion, secure monetary sovereignty, and provide a digital alternative to physical cash.
CBDC has three advantages: Enhancing efficiency by reducing reliance on physical cash and intermediaries, faster and efficient crossborder payments, potentially lower transaction costs associated with cash handling and distribution, and provide a stable digital alternative to cash.
It enhances security and financial stability by providing a secure platform for transactions, reducing the risk of counterfeiting and fraud as well as promoting financial inclusion by offering a digital payment option accessible to individuals and businesses, in both urban and remote areas.
Lee Heng Guie is the executive director of the Socio-Economic Research Centre. The views expressed here are the writer’s own.
Source: The future of digital payments (Tuesday, 26 Aug 2025). The Star. Retrieved from https://www.thestar.com.my/business/business-news/2025/08/26/the-future-of-digital-payments
Disclaimer
The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile. The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, Bond and Sukuk Information Platform Sdn Bhd (“the Company”) does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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