China’s Stablecoin Underground Booms to $104 Billion Despite Crypto Ban
Despite Beijing’s strict crypto ban, China’s underground stablecoin market has surged to $104.1 billion annually, according to the latest Chainalysis 2026 Geography of Cryptocurrency Report. This activity involves 18.1 million individual transfers and represents a 43-fold growth in self-custodied wallet usage between Q1 2024 and Q2 2026. The surge coincides with the expansion of China’s social credit system into the financial and internet sectors in March 2025, suggesting users are migrating to stablecoins for privacy.
The high velocity of stablecoin transactions in China, at 33.2 times per year, far exceeds the global average of 9.3 times. This indicates that stablecoins are primarily used for high-frequency payments rather than as a store of value. Growth rates for transactions of all sizes, 996% for sub-$100 transfers, 1,057% for $100, $1,000, and 1,321% for $1,000, $10,000, highlight broad adoption among retail users and small businesses.
Illicit activity also plays a role, with Chinese-language money laundering networks moving $16.1 billion in illicit crypto inflows in 2025. These networks operate primarily from Southeast Asian jurisdictions and use Telegram-based platforms. However, the majority of P2P stablecoin activity remains legitimate, albeit non-compliant with state regulations.
Beijing has responded by reiterating its ban on virtual currencies and prohibiting the issuance of offshore RMB-pegged stablecoins without government consent. The U.S. Treasury is also taking action, proposing rules under the GENIUS Act to address risks from unregulated foreign-issued stablecoins. Meanwhile, Hong Kong is testing regulated stablecoin issuances, but these remain separate from the mainland’s underground market.