Will stablecoins thrive globally without China?

Stablecoins find traction beyond traditional finance

Stablecoins have quietly become one of the most widely used financial instruments in the digital economy. Pegged to fiat currencies and designed to minimise volatility, they now process an estimated 46 trillion dollars in transactions annually, a figure that rivals or exceeds volumes handled by some traditional payment rails. Their appeal lies in speed, low cost, and programmability, making them attractive for cross border payments, decentralised finance, and emerging market use cases.

Yet despite this global momentum, China has made it clear that stablecoins have no place in its financial system. The question now facing markets and policymakers is whether stablecoins can truly thrive worldwide while being excluded from the world’s second largest economy.

China’s hard line on stablecoins

At a recent financial policy forum, Pan Gongsheng, governor of the People’s Bank of China, reiterated Beijing’s firm opposition to stablecoins. He described them as a new source of vulnerabilities in the global financial system, warning that they could undermine monetary sovereignty, particularly in smaller economies.

Pan argued that stablecoins amplify weaknesses in global financial regulation, pointing to risks such as money laundering, illegal cross border fund transfers, and terrorist financing. He also stressed that many stablecoin projects fail to meet basic compliance requirements, including customer identification and anti money laundering checks. These concerns reflect China’s long standing emphasis on tight capital controls and centralised oversight.

A clash of financial philosophies

China’s position highlights a deeper philosophical divide. Stablecoins are built on decentralised or semi decentralised infrastructure, often operating across borders without reliance on a single authority. This model challenges state control over money, a principle that sits at the core of China’s financial governance.

Rather than embracing private digital currencies, Beijing has focused on developing the digital yuan, a central bank issued digital currency designed to enhance efficiency while preserving state control. From this perspective, stablecoins are not an innovation to be integrated, but a competing system to be contained.

Global adoption continues without China

Despite China’s opposition, stablecoins have found strong product market fit elsewhere. In regions with underdeveloped banking systems or unstable local currencies, they are increasingly used as a store of value and a medium of exchange. In developed markets, they underpin large parts of the crypto economy, from trading and lending to settlement and payments.

Major corporations, fintech firms, and even some banks are experimenting with stablecoin based infrastructure. The scale of usage suggests that stablecoins are solving real problems, particularly in cross border transactions where traditional systems remain slow and expensive.

Regulation outside China is evolving

One reason stablecoins have been able to grow without China is the emergence of clearer regulatory frameworks in other jurisdictions. The European Union, the United States, and parts of Asia are moving toward licensing regimes that impose reserve requirements, transparency rules, and compliance obligations on issuers.

This regulatory evolution challenges the idea that stablecoins are inherently ungovernable. While early projects often operated in grey areas, the market is gradually shifting toward models that integrate with existing financial oversight, even if they remain technologically disruptive.

Can stablecoins succeed without China?

China’s absence is significant, but not necessarily fatal. Stablecoins do not rely on any single market in the way traditional financial products often do. Their value comes from network effects across borders, particularly in regions where financial infrastructure is fragmented.

Moreover, China’s domestic payments market is already dominated by powerful private platforms operating under state supervision. Stablecoins were unlikely to gain a foothold there even without explicit bans. Globally, however, demand is driven by different dynamics, including dollar liquidity, global trade, and digital commerce.

A parallel financial system takes shape

Rather than replacing traditional finance outright, stablecoins are increasingly forming a parallel layer that interacts with existing systems. They offer settlement and liquidity where banks are slow or absent, while still relying on fiat currencies and regulated on ramps.

China’s resistance may slow global convergence, but it also reinforces the idea that stablecoins represent a distinct path in financial innovation. One driven less by state coordination and more by market adoption.

The future without Beijing’s blessing

Stablecoins may never operate freely inside China, but their global trajectory suggests they do not need to. As long as they continue to address real economic needs and adapt to regulatory expectations elsewhere, they are likely to remain a significant forcèforce in global finance.

China’s stance underscores the limits of decentralised money in highly controlled systems. Yet outside those borders, stablecoins appear poised to keep growing, reshaping how value moves around the world even without participation from the world’s second largest economy.