China P2P stablecoin wallets grew 43x despite ban, Chainalysis finds

The number of unique wallets sending peer-to-peer stablecoin transfers inside China rose 43 times between the first quarter of 2024 and the second quarter of 2026, according to a Chainalysis East Asia report published on October 5, 2026 and detailed by Cryptopolitan. The finding lands in a market where crypto trading has been outlawed for years.

Chainalysis put China’s crypto economy at a minimum of $176.3 billion despite the ban, and measured $104.1 billion moving through 18.1 million self-custodied stablecoin transfers over its July 2025 to June 2026 reporting window. Across the five largest markets — South Korea, Japan, Hong Kong, China and Taiwan — the firm valued East Asia’s crypto economy at roughly $1.2 trillion.

Key facts

• Chinese stablecoin holdings turned over 33.2 times a year, more than triple the global average of 9.3.
• Domestic P2P transfers made up 59.1% of China’s crypto activity, about 3.5 times their share a year earlier, with March 2026 alone adding $4.9 billion.
• South Korea is the region’s largest market at $449.1 billion, up 12.3% on the period, led by 16.3% growth in its exchange sector and $51.1 billion in exchange-related flows.
• Hong Kong took in almost $24 billion in business-to-business flows, and institutional platform receipts grew 87% in a year, the fastest in East Asia.
• Japan’s DEX activity has more than tripled since 2022, with 65.7% of swaps between $10 and $1,000.

Rules on paper, wallets in practice

Chainalysis described a widening split between what East Asian regulators permit and what users actually do. Mainland China shows the widest gap. Domestic P2P activity there is now the majority of measured volume, and the firm reads the 33.2-times turnover rate as a sign that users treat stablecoins as operating cash rather than savings.

Chinese authorities reinforced restrictions in February 2026, when the People’s Bank of China and seven other agencies banned unauthorized yuan-pegged coins both at home and abroad. Domestic stablecoin transfers still posted a $4.9 billion monthly spike the following month, which Chainalysis framed as a behavioural shift toward direct wallet-to-wallet transfers rather than a one-off.

Hong Kong licenses coins with nowhere to trade

Hong Kong’s $192.2 billion market is the most institutional in the region. About 16% of money flowing into services went to institutional platforms, nearly three times the share of any neighbour, and 85% of that went to custody providers, prime brokers and market makers.

The Hong Kong Monetary Authority issued its first two stablecoin issuer licenses on April 10, 2026 to HSBC and Anchorpoint, a venture backed by Standard Chartered, HKT and Animoca Brands, choosing them from 36 applicants under an ordinance that took effect in August 2025, as Cryptopolitan reported. Neither firm has a venue, trading pair or start date to trade its coin yet, and the bill meant to license virtual-asset trading platforms is only due for review later this year.

South Korea’s retail tilt and Japan’s DEX shift

South Korea’s market is overwhelmingly retail, and Chainalysis found those traders favoured AI-linked tokens more than any other category. A 22% tax on gains above 2.5 million won — 20% national plus 2% local — is scheduled to take effect on January 1, 2027 after repeated delays. Independent lawmaker Han Dong-hoon is pushing for a further two-year postponement, arguing authorities cannot yet track trading once assets leave domestic exchanges, and a petition backing a delay has reached the 50,000 signatures needed for parliamentary review.

In Japan, valued at $228.3 billion, decentralized exchanges took 34.5% of service activity — the highest DEX share of any established market in the region. Crypto gains are taxed as miscellaneous income at rates reaching about 55% until a law reclassifying crypto as a financial product under the Financial Instruments and Exchange Act takes effect in fiscal 2027. Cointelegraph reported that Japanese lawmakers passed revisions in July bringing digital assets under the country’s financial-markets framework; the lower 20% flat rate applies only from January 1, 2028.

Chainalysis’s report, covered by Cointelegraph and Cryptobriefing, notes that restrictions aimed at platforms work best when activity runs through platforms. Cryptobriefing put the point bluntly: once users move to self-custody, there are fewer chokepoints to press on.

Why it matters

The data suggests that banning or taxing crypto at the platform level does less to curb usage than regulators assume once users hold their own keys. Chinese users, facing an outright trading ban, have shifted volume to transfers no domestic exchange intermediates. Hong Kong has done the opposite — licensing issuers before creating a place to trade their coins — while South Korea and Japan are taxing retail activity that keeps moving to venues their authorities find harder to monitor. The contrast shows regulation and adoption diverging rather than converging.

What to watch

Hong Kong’s virtual-asset trading platform bill is due for review later this year, which will determine whether HSBC and Anchorpoint have anywhere to trade. Separately, South Korea’s parliament faces the stalled 22% tax start date of January 1, 2027 and Han Dong-hoon’s delay push, now backed by a petition that has cleared the review threshold.

The figures above describe past on-chain activity and pending tax and licensing measures rather than a valuation call. This is not financial advice, and crypto markets are volatile and uncertain.

Disclaimer: This article is for information only and is not investment, financial or trading advice. Cryptocurrency prices are highly volatile. Always do your own research.

Sources: Cryptopolitan, Cointelegraph, Cryptobriefing