Stablecoins in China Yiwu: Separating Myth from Market Readiness

Recently, a widely circulated claim in China suggested that over 3,000 merchants in Yiwu were accepting stablecoins, with monthly transaction volumes reportedly reaching $1 billion. The topic gained traction, reaching the fourth spot on Baidu’s trending search list on July 8 under the headline “Yiwu merchants start accepting stablecoins.”

However, an on-site investigation by the 21st Century Business Herald painted a different picture. Most merchants either do not accept stablecoins, are unfamiliar with them, or have concerns about regulatory compliance. A local crypto observer confirmed that stablecoin usage among Yiwu merchants is rare, with little to no interest in adopting it for transactions.

A cross-border e-commerce entrepreneur added that while some may use stablecoins, most still rely on conventional methods such as bank transfers or third-party payment platforms. Yiwu merchants typically prefer payments in Chinese yuan or U.S. dollars, processed through banks or freight forwarding companies.

Legal experts emphasized that stablecoins are not allowed for cross-border payments between China and other countries. Receiving stablecoins via overseas wallets and transferring them into China is a violation of foreign exchange control regulations.

Regulating the Future: A Framework for Yuan Stablecoins in the Web3 Era

As stablecoins gain recognition for their flexibility in cross-border payments, China is beginning to explore their strategic potential alongside CBDCs. In line with this shift, Yang Tao, Deputy Director of the National Institution for Finance & Development, proposed a dual-system framework for a yuan stablecoin in a column published by the 21st Century Business Herald.

He argued that Web3-native stablecoins have outgrown the conventional divide between onshore and offshore classifications. In his view, their development and regulation should be guided by considerations of financial security and the protection of monetary sovereignty.

To achieve this vision, Yang proposed two key models for developing a yuan stablecoin. The first involves establishing a CNY-backed stablecoin (CNYC) issuer within the Shanghai Free Trade Zone. The second model suggests enabling digital yuan operators to mint stablecoins directly on-chain.

These domestic efforts would be complemented by issuing offshore yuan stablecoins (CNHC) in Hong Kong, creating a dual-system framework that links onshore and offshore markets. Yang stressed the need for strict risk controls, gradual implementation, and clear regulatory frameworks to enhance China’s voice in the global stablecoin landscape.

Stablecoins and the Future of Global Payments

According to venture capital firm a16z Crypto, the current payment system remains expensive, slow, and overly complex. Merchants face high fees, particularly from card payments, while U.S. bank transfers often take several days. Peer-to-peer apps may appear seamless but rely on fragmented backend infrastructure and are typically restricted by region, making cross-network transfers inefficient. As a result, many users and businesses remain underserved.

The chart below illustrates these inefficiencies by showing the high costs, slow settlement times, and limited accessibility of traditional systems. In contrast, stablecoins offer a faster, cheaper, and more globally accessible alternative.

Yiwu, home to the world’s largest wholesale market, plays a critical role in global trade and attracts buyers from more than 200 countries. Its export-driven economy depends on high-volume, low-margin transactions, especially from small and medium-sized businesses. For these merchants, stablecoins offer an efficient cross-border payment solution. By removing traditional intermediaries, stablecoins reduce fees, speed up settlements, and improve cash flow. This is particularly valuable for smaller exporters who often face high transaction costs and limited access to international banking. However, successful adoption will require clear regulatory guidance and strong compliance measures.