Stablecoin market capitalization skyrockets to 308 billion USD! China's ban can't stop 46 trillion volume.

The governor of the People's Bank of China, Pan Gongsheng, described stablecoins as a “new source of vulnerability” in the global financial system. Despite criticism from China, according to DeFiLlama data, the total market capitalization of stablecoins has still surpassed $308 billion, growing nearly $100 billion since January. A16z reported that the industry's trading volume exceeded $46 trillion in the past year, rivaling established payment giants like Visa.

The People's Bank of China strikes again, the threat theory of stablecoins escalates

China has once again made its position clear regarding stablecoins. Pan Gongsheng emphasized that these assets “exacerbate gaps in global financial regulation, such as money laundering, illegal cross-border fund transfers, and terrorist financing.” He also pointed out that most stablecoin projects fail to meet basic compliance standards, such as customer identification and anti-money laundering checks.

These statements reaffirm China's consistent position over the past decade: private digital currencies and stablecoins remain prohibited from entering the market, even as Beijing continues to promote its digital yuan (e-CNY) as a state-controlled alternative. China's strategy is clear; it does not oppose digital currencies themselves but rather opposes digital currencies that are not under state control. The advancement of the digital yuan and the crackdown on stablecoins constitute two sides of China's fintech strategy.

However, as other regions of the world accelerate towards tokenized finance, China's absence raises an urgent question: Can stablecoins really thrive without the world's largest fintech economy? From the market data, the current answer seems to be affirmative.

Global market surges against the trend, multiple Asian countries rush in

(Source: a16zcrypto)

Despite China's increased restrictions on financial instruments, the global adoption rate of stablecoins has surged significantly. According to data from DeFiLlama, the total market capitalization of the industry recently surpassed $308 billion, growing by nearly $100 billion since January. This growth rate is nearly impossible to achieve in traditional finance, demonstrating the strong demand for stablecoins as an emerging financial infrastructure.

Meanwhile, a report from A16z shows that the trading volume in the industry exceeded 46 trillion dollars over the past year. If we exclude legitimate transactions, this figure is comparable to established payment giants like Visa. A16z partner Chris Dixon stated, “Stablecoins have become mainstream. They have found a product-market fit, and their trading volume is enough to rival the largest payment networks in the world.”

Considering that governments in various Asian countries have historically exercised caution similar to Beijing, the development towards the opposite direction is not surprising. This milestone achievement comes as no surprise. This year, Japan legalized fiat-backed stablecoins, with fintech company JPYC Inc. launching the first fully compliant yen-pegged token on Ethereum, Avalanche, and Polygon. Additionally, other leading jurisdictions, including South Korea, Hong Kong, and Singapore, are formulating similar frameworks to issue licenses to issuers and protect consumers.

Asia Stablecoin Regulatory Breakthrough Timeline:

Japan: Legalization of fiat-backed stablecoins in 2025, JPYC launches compliant yen token.

Hong Kong: Establish a licensing framework to attract international stablecoin issuers

Singapore: Establish consumer protection mechanisms and promote institutional-level applications.

South Korea: Assessing the regulatory framework, expected to follow up on the legalization process.

In the West, the United States is pushing for formal regulation through legislation such as the GENIUS Act, while major institutions like PayPal and Western Union are launching their own tokenized settlement assets. These initiatives are transforming stablecoins from speculative tools into regulated infrastructure for payments, remittances, and on-chain capital management. This momentum indicates that the market can operate and thrive normally even without China's participation.

The Underworld Market Reveals the Under Currents Under the Ban

However, even as the industry continues to grow, China's influence remains. The market size, cross-border trade capabilities, and digital payment infrastructure of this Asian country are still unmatched. Platforms like Alipay and WeChat Pay process transaction volumes each year that exceed the totals of many regions. Excluding stablecoins from this ecosystem would limit their reach and potential scale.

In fact, the ban did not eliminate stablecoin activities within China, but merely shifted them underground. Chinese investors and companies still use tokens pegged to the US dollar (such as USDT) for international fund transfers or to hedge against fluctuations in the renminbi through offshore exchanges and private over-the-counter trading platforms. Despite official restrictions, stablecoins remain a hidden tool for capital flow within China's internet.

This kind of underground application indicates that a thriving industry can ultimately benefit from China's participation in this technology. Whether through regulatory engagement or through the interoperability between the digital renminbi and compliant stablecoins, China's full integration into the blockchain payment system will link the world's largest trading economy with blockchain-based payments. This will undoubtedly fill the network effect that stablecoins currently lack.

Currently, two parallel systems are emerging: one is an open, market-driven ecosystem dominated by dollar-backed tokens, while the other is a closed, sovereign digital currency model centered around the digital renminbi. This parallel development could lead to further fragmentation of the global financial system, with interoperability challenges between Eastern and Western payment systems.

China's absence instead strengthens Decentralized Finance

China's choice to take a special route may backfire, instead strengthening the development prospects of Decentralized Finance and stablecoins. Beijing's rejection of integration forces other countries in the world to develop independently. As a result, this process has already created a more diversified market with stronger regulatory awareness and a more complete institutional support.

Stablecoins have become an indispensable part of global liquidity, powering decentralized exchanges, tokenized bond markets, and U.S. Treasuries. Essentially, stablecoins now serve as the core liquidity layer of Decentralized Finance and the backbone of on-chain commerce, enabling instant settlement across thousands of platforms. Despite facing regulatory uncertainties, cyberattacks, and skepticism from central banks, the growth momentum of stablecoins remains strong.

Therefore, each expansion has strengthened their durability and proven that the concept of a borderless digital dollar can survive even without China's approval. Data from A16z shows that stablecoins have processed over $46 trillion in transaction volume, a figure that demonstrates the reality and durability of its market demand.

However, in the long run, the situation remains complex. Without China, stablecoins will lose the opportunity to access one of the largest fintech innovation and trade settlement platforms in the world. With China, they can truly achieve interoperability between Eastern and Western payment systems. For now, the market is proving that it can thrive even without China.

However, thriving on a global scale may be more difficult due to the lack of the world's most important digital economy limiting the scale. Nevertheless, the quiet participation of Chinese investors indicates that even strict policies cannot suppress the appeal of programmable currency. The existence of this underground circulation actually proves that the value proposition of stablecoins has already taken root in people's hearts.