China banned cryptocurrency trading and mining years ago, framing the move as a defense of financial stability and capital controls. Yet new reporting suggests that stablecoins, digital tokens pegged to the US dollar, continue to circulate widely inside the country through informal, peer-to-peer channels.
Forkast reported that this underground stablecoin economy has reached roughly $104 billion. CryptoSlate, publishing separately, described a broader peer-to-peer crypto economy valued at $176 billion. The discrepancy between the two figures likely reflects differences in methodology, scope, or the specific activity each outlet chose to measure.
Both reports point to the same underlying dynamic. Despite strict enforcement against exchanges and formal trading venues, demand for dollar-denominated digital assets has not disappeared. Instead, it appears to have migrated into less visible, harder-to-police corners of the financial system.
Stablecoins have become a preferred vehicle for this activity because they offer price stability relative to volatile cryptocurrencies like Bitcoin. For users seeking to move money across borders, hedge against a weaker yuan, or simply hold dollar exposure, stablecoins can serve as a practical workaround. Peer-to-peer trading, often conducted through informal networks rather than regulated exchanges, allows participants to transact without directly engaging banks or licensed platforms.
China's capital controls restrict how much currency residents can move abroad each year. Stablecoins, transferable with minimal friction across blockchain networks, offer an alternative route that bypasses traditional banking checkpoints. This has made them attractive not just to crypto enthusiasts but to a wider population seeking dollar access or cross-border payment options.
The scale described in these reports raises questions about how effective capital control enforcement has been in the digital asset era. Regulators in Beijing have repeatedly cracked down on exchanges, mining operations, and public crypto advertising since 2017. The persistence of a large peer-to-peer market suggests that prohibition alone has not eliminated underlying demand.
Neither Forkast nor CryptoSlate detailed the precise methodology behind their respective estimates in the available reporting. The gap between $104 billion and $176 billion highlights the inherent difficulty of sizing an activity that, by design, avoids formal reporting channels and regulatory visibility.
Market Impact
For global stablecoin issuers, sustained demand inside China represents a significant, if largely informal, user base operating outside regulatory purview. This complicates efforts by Chinese authorities to fully insulate domestic capital markets from dollar-denominated digital assets.
The discrepancy in size estimates also signals a broader measurement challenge facing analysts and policymakers tracking crypto activity in restrictive jurisdictions. Market participants should treat any single figure for the size of China's underground stablecoin economy as an estimate rather than a precise count, given the opacity inherent in peer-to-peer markets.
The reports suggest that China's crypto ban has reshaped, rather than eliminated, domestic demand for dollar-linked digital assets. How large that shadow market truly is remains an open question, with current estimates diverging by tens of billions of dollars.
Frequently Asked Questions
What is a stablecoin?
A stablecoin is a cryptocurrency designed to maintain a steady value, typically pegged to a fiat currency like the US dollar, by backing each token with reserves or other collateral.
Why do the size estimates for China's stablecoin market differ so much?
Forkast reported a figure of $104 billion while CryptoSlate cited $176 billion for the broader peer-to-peer crypto economy. The difference likely stems from differing methodologies and what each report chose to measure, since peer-to-peer activity is not formally recorded.
Is cryptocurrency trading legal in China?
No. China has banned cryptocurrency trading, exchanges, and mining through a series of regulatory actions since 2017, citing financial stability and capital control concerns.
Why are stablecoins popular despite the ban?
Stablecoins offer price stability and can be transferred peer-to-peer, making them a practical way for users to access dollar-denominated value or move funds without going through banks or licensed exchanges.