China has once again made its position on stablecoins unmistakably clear.
At a recent financial policy forum, Pan Gongsheng, governor of the People’s Bank of China (PBoC), described stablecoins as a “new source of vulnerabilities” within the global financial system. He warned that they could undermine the monetary sovereignty of smaller economies and enable illicit financial flows.
According to him, these assets “strengthen loopholes in global financial regulations, such as money laundering, illegal cross-border money transfers and terrorist financing.” He also highlighted that most stablecoin projects do not meet basic standards such as customer identification and anti-money laundering controls.
His comments confirm China’s decade-long position: private digital currencies and stablecoins remain off-limits, even as Beijing continues to push its digital yuan (e-CNY) as a state-controlled alternative.
But as the rest of the world moves faster and faster toward tokenized finance, China’s absence raises the pressing question of whether stablecoins can truly thrive without the world’s largest fintech economy.
A global market that moves without Beijing
For now, the answer appears to be yes.
As China doubles down on restrictions, global adoption of stablecoins has soared. According to data from DeFiLlama, the sector’s total capitalization recently surpassed $308 billion, up nearly $100 billion since January.
At the same time, a report from A16z shows that the industry’s transaction volumes surpassed $46 trillion last year, rivaling established payments giants like Visa, when adjusted for legitimate activity.
Chris Dixon, partner at venture capital firm A16z, said:
“Stablecoins have become mainstream. [They] have found a product-market fit and can rival the largest payment networks in the world in terms of transaction volume.”
The milestone is not surprising given that governments across Asia, which once echoed Beijing’s caution, are moving in the opposite direction.
Japan legalized fiat-backed stablecoins this year, with fintech company JPYC Inc. launched the first fully compatible yen-denominated token on Ethereum, Avalanche and Polygon.
In addition, other leading jurisdictions, including South Korea, Hong Kong and Singapore, are preparing similar frameworks to license publishers and protect consumers.
In the West, the United States is pursuing formal oversight through legislation such as the GENIUS Act, while major institutions from PayPal to Western Union are rolling out their own token settlement assets.
These steps transform stablecoins from speculative instruments into a regulated infrastructure for payments, fund transfers and on-chain treasury management.
That momentum suggests the market can function and thrive without China’s participation, as the technology has matured from its early crypto-native roots.
Essentially, stablecoins now act as the core liquidity layer of decentralized finance and the backbone of on-chain trading, enabling instant settlement on thousands of platforms.
Blooming without China: but not completely free from it
But even as the industry expands, China’s influence continues.
The Asian country’s market size, cross-border trading capacity and digital payments infrastructure remain unparalleled. Platforms such as Alipay and WeChat Pay process more transactions annually than many entire regions combined. Excluding that ecosystem limits the reach and potential scale of stablecoins.
In practice, the ban has not wiped out stablecoin activity in China. Instead, it just pushed it underground.
Chinese investors and companies still use dollar-pegged tokens such as USDT through offshore exchanges and private OTC desks to move money internationally or hedge against yuan volatility.
Despite official restrictions, stablecoins remain a silent tool for capital mobility within Chinese networks.
This underground use illustrates how the booming sector could benefit from China’s eventual integration into the technology.
A fully integrated Chinese presence, either through regulated participation or interoperability between the e-CNY and compatible stablecoins, would link the world’s largest trading economy to blockchain-based payments. This would undoubtedly complete the network effect that stablecoins currently lack.
For now, however, two parallel systems are emerging: an open, market-driven ecosystem led by dollar-backed tokens, and a closed, sovereign digital currency model built around the e-CNY.
A necessary absence?
China’s decision to differentiate itself could, paradoxically, strengthen the case for decentralized finance and stablecoins.
By refusing to integrate, Beijing is forcing the rest of the world to build independently. As a result, this process has already created a more diversified, regulatory-conscious and institutionally supported market.
Stablecoins have become indispensable to global liquidity and are the driving force behind decentralized exchanges, tokenized bond markets and US government bonds. Their growth has continued despite regulatory uncertainty, cyber attacks and central bank skepticism.
Thus, each expansion strengthens their staying power and proves that the concept of a borderless digital dollar can survive without China’s approval.
Yet the long-term picture remains nuanced.
Without China, stablecoins lose access to one of the largest pools of fintech innovation and global trading arrangements. This would allow them to achieve true interoperability between Western and Eastern payment systems.
For now, the market is proving that flourishing without China is possible.
However, thriving globally can be much more difficult because the absence of the world’s most important digital economy limits scale.
Yet the silent participation of Chinese investors shows that even strict policies cannot suppress the appeal of programmable money.