The Chinese cryptocurrency market is experiencing significant growth despite ongoing restrictions. According to Chainalysis, the market's volume has reached at least $176 billion, with 59.1% of transactions occurring through peer-to-peer (P2P) methods.

East Asia’s 1.2T+ crypto economy shows remarkable diversity: South Korea (449B) leads with an AI-crypto pivot, Hong Kong sees 87% institutional growth, Japan’s retail market expands 36% on DEXs, and China’s stablecoin P2P wallets grew 43x. Read our new chapter from the 2026 Geography of Cryptocurrency Report: https://t.co/6U5t4y9FGM

— Chainalysis (@chainalysis) October 5, 2026

The number of wallets sending stablecoins directly to each other surged 43 times over the past two years.

The Shift of China's Crypto Market to P2P Transactions

From July 2025 to June 2026, Chainalysis estimates that the Chinese crypto economy reached at least $176.3 billion. Unlike many other markets, a significant portion of this activity occurs directly between users rather than through exchanges.

Source: Chainalysis.

The internal P2P segment has expanded to constitute 59.1% of the entire Chinese crypto economy, marking a 3.5-fold increase compared to the previous period. The number of unique wallets engaged in P2P transactions involving stablecoins grew 43 times from Q1 2024 to Q2 2026.

Source: Chainalysis.

This surge is occurring despite China's continued prohibition on cryptocurrency services. In contrast to South Korea and Hong Kong, where markets are gradually transitioning to regulated frameworks, Chinese users are bypassing traditional exchange channels and directly interacting through wallets.

Stablecoins as a Payment Instrument

Chainalysis noted a significant uptick in stablecoin transactions starting March 2025, with small P2P transfers rapidly increasing:

  • Transactions under $100 rose by 996%;
  • Transactions between $100 and $1000 increased by 1057%;
  • Transactions from $1000 to $10,000 surged by 1321%.

During the analyzed period, Chinese users conducted 18.1 million transactions amounting to $104.1 billion, with an average owned stablecoin volume of about $3.1 billion. This indicates that assets were circulating approximately 33.2 times a year, significantly higher than the global average of 9.3 times.

Chainalysis suggests that this rapid turnover indicates stablecoins are being utilized more as working capital and a payment infrastructure rather than as savings. In essence, digital dollars are beginning to serve as a distinct financial channel within the country.

Link to the Social Credit System Remains Hypothetical

Chainalysis connects the rise in P2P activity to the expansion of China's social credit system into financial and internet sectors in March 2025. Analysts speculate that some users may have turned to cryptocurrency payments due to limitations imposed by the traditional financial infrastructure.

The study explores two possible scenarios: individuals facing restrictions from the system could use cryptocurrencies as an alternative payment channel, while others may conduct transactions outside of formal monitoring systems.

However, Chainalysis emphasizes that this is a working hypothesis rather than a proven causal link.

China Develops a Model Opposite to Hong Kong

The contrast is particularly stark when compared to Hong Kong, where institutional platforms account for 16% of service inflows, and the city received nearly $24 billion in B2B transfers during the same period. Conversely, China is primarily developing an unregulated P2P segment.

Source: Chainalysis.

This situation illustrates an unexpected consequence of the ban: rather than disappearing, the crypto market has transformed its infrastructure. The more centralized channels are restricted, the more activity shifts to direct wallet-to-wallet transfers, with stablecoins gradually taking on the role of a parallel payment system.

“Japan, Hong Kong, Singapore, and South Korea have taken a different path, establishing controlled access regimes intended for operations within a licensed perimeter,” Chainalysis noted.

It is worth mentioning that in September, the Ministry of State Security of China warned citizens about the risks associated with cryptocurrencies, labeling them as tools for money laundering, cyberattacks, and “accomplices” of espionage.

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