China Bans Crypto, Citizens Send $104B Anyway: The Great Stablecoin Workaround 🚀

The number of unique wallets sending peer-to-peer stablecoin transactions in China grew 43-fold between the first quarter of 2024 and the second quarter of 2026, according to a new Chainalysis report. The blockchain analytics company recorded $104.1 billion across 18.1 million transfers involving China's self-custodied stablecoin holdings during its 2026 reporting period, which ran from July 2025 to June 2026. Stablecoin holdings turned over 33.2 times per year, more than three times the global average of 9.3, a pattern Chainalysis said was consistent with users treating stablecoins as working capital. Chainalysis estimated that China's crypto economy is worth at least $176 billion.

Domestic P2P activity accounted for 59.1% of the total, 3.5 times its share in the 2025 reporting period, and China's domestic stablecoin transfer volume added $4.9 billion in March 2026, the largest monthly increase shown in the data. The growth comes despite China's longstanding restrictions on crypto trading, which authorities reinforced in February with new rules targeting unauthorized yuan-pegged stablecoins and tokenized real-world assets.

China's P2P-heavy market contrasts with South Korea, which Chainalysis ranked as East Asia's largest crypto economy at $449.1 billion. Activity in South Korea grew 12.3% from the previous period, with retail traders showing a strong preference for AI-linked tokens. Hong Kong stood out for institutional activity, with Chainalysis reporting that institutional platforms accounted for 16% of service inflows, nearly three times the share in any regional neighbor. The city received almost $24 billion in inbound business-to-business flows and issued its first stablecoin licenses in April.

In Japan, decentralized exchanges accounted for nearly 35% of service activity, the highest share among mature East Asian markets. Chainalysis said 65.7% of DEX swaps were between $10 and $1,000, and DEX activity had risen more than 200% since 2022. Japanese lawmakers passed revisions in July that bring digital assets under the country's financial-markets framework, signaling a regulatory direction distinct from Beijing's enforcement posture.