As governments and financial institutions (FIs) grapple with the rapid rise of digital assets, a quiet revolution is taking place in Japan that offers a glimpse into the future. By utilising stablecoins like JPYC for government bonds and economic stimuli, Japan is demonstrating that these assets can become instruments of national economic sovereignty rather than threats to central bank control.
With the global financial landscape shifting, Aishwary Gupta, Global Head of Payments & RWA at Polygon, predicts a “super cycle” of stablecoins that could see the number of issuers explode to over 100,000 within five years. This surge, he argues, will force traditional banks to fundamentally restructure how they manage capital to avoid becoming irrelevant.
Empowering Sovereignty, Not Losing Control
The prevailing narrative among many regulators is fear—specifically, that stablecoins strip central banks of their monetary influence. Gupta challenges this view, arguing that when integrated correctly, stablecoins actually extend a currency’s power.
“It’s not about the government losing control,” Gupta explained to The Fintech Times. “It’s more like giving more power to any country’s currency… if you look at the US economy, the demand for the petrodollar was reducing, and then stablecoins came in and suddenly everyone wanted US dollars because they had access to it.”
Gupta suggests that monetary policy decisions, such as Federal Reserve rate changes, impact stablecoins just as they do traditional fiat, meaning the government retains its macroeconomic levers.
The ‘Super Cycle’ and the Battle for Deposits
We are currently at the beginning of what Gupta terms a “super cycle,” where every major entity—from banks to big tech—will attempt to launch their own stablecoin.
“I think in five years my projection is that there are going to be a hundred thousand stablecoins at least.”
However, this explosion of digital assets presents a critical threat to traditional banking models. For decades, banks have relied on low-interest deposits (CASA – Current Account Savings Account) as a cheap source of capital. With stablecoins now offering yields that banks often cannot or will not match, this capital is moving on-chain.
“The capital will flow out of the banks which means this reduces the capability of a bank to actually create credit because effectively the money in the bank helps them to create credit and it also kind of increases their cost of capital,” Gupta warned.
The Rise of Deposit Tokens
To counter this capital flight, Gupta foresees banks issuing “deposit tokens”—digital representations of customer deposits that allow money to remain within the bank’s ecosystem while offering the utility of blockchain technology.
Using JP Morgan as an example, Gupta described a future where a high-net-worth individual could use a deposit token (JPMD) to trade on an exchange like Coinbase without ever moving the underlying fiat out of the bank’s custody. This model protects the bank’s balance sheet while satisfying the customer’s need for digital asset mobility.
Consolidating the Chaos
With a projected 100,000 stablecoins entering the market, fragmentation is inevitable. Gupta believes the solution lies in settlement layers—neutral infrastructure that abstracts the complexity away from the user.
Future payment rails will likely operate like a “mesh,” where a user can pay in one currency (e.g., JPMD) and the merchant receives another (e.g., USDC), with the conversion happening seamlessly in the background. In this matured state, the specific stablecoin brand becomes invisible to the consumer, much like the underlying technology of a credit card swipe is today.
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