⛓️ China🇨🇳: Stablecoins are emerging as a parallel payment network despite the cryptocurrency ban

⛓️ China🇨🇳: Stablecoins are emerging as a parallel payment network despite the cryptocurrency ban

The main driver of this trend is P2P activity, according to a Chainalysis report.

📌 The cryptocurrency market in mainland China is growing rapidly, with transaction volumes reaching at least USD 176 billion. P2P transactions account for 59.1% of all activity, in contrast to South Korea🇰🇷 and Hong Kong🇭🇰, where the market is gradually shifting toward regulated infrastructure.

📎 Stablecoin activity began accelerating sharply in March 2025, with small-value P2P transfers accounting for a significant share of transactions:

🔴 USD 1–100: up 996%;
🔴 USD 100–1,000: up 1,057%;
🔴 USD 1,000–10,000: up 1,321%.

📌 During the period analyzed, Chinese users conducted 18.1 million transactions, with a combined value of USD 104.1 billion. The average volume of assets in circulation reached USD 3.1 billion, implying an annual asset turnover velocity of 33.2 times — more than three times the global average of 9.3 times. These figures suggest that users primarily treat stablecoins as working capital for payments and transfers, rather than as a store of value or savings instrument.

📌 One possible explanation for the rapid expansion of P2P activity is the tightening of financial and digital oversight in China. According to the original report, in March 2025, Chinese authorities extended the application of the social credit system to the financial sector and the internet. Blacklists that restrict access to credit, employment, and financial services are reportedly becoming more closely integrated with banking compliance infrastructure. Users seeking to limit their exposure to government monitoring may therefore be turning to cryptocurrency transactions instead of official channels. However, this link should be treated as a hypothesis rather than an established causal relationship.

✍️ Context: In February 2026, Chinese regulators prohibited individuals and legal entities from issuing yuan-pegged stablecoins without government authorization. Cryptocurrencies are not recognized as legal means of payment in China, and commercial activities involving these assets are subject to strict prohibitions and regulatory restrictions.

#news #China #Asia #crypto #P2P

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