China's peer-to-peer stablecoin activity has expanded sharply despite the country's restrictions on cryptocurrency trading, while South Korea has emerged as East Asia's largest crypto economy, according to a report by blockchain analytics firm Chainalysis.

The firm's latest analysis points to increasingly divergent market structures across the region: a surge in direct, wallet-to-wallet stablecoin transfers in China, a large but less profitable trading economy in South Korea, an institutional concentration of flows in Hong Kong and a pronounced shift toward decentralized exchanges in Japan.

China: 43-Fold Growth in P2P Wallets

The number of unique wallets sending peer-to-peer stablecoin transactions in China rose 43-fold between the first quarter of 2024 and the second quarter of 2026, Chainalysis data showed. Stablecoins are tokens pegged to a fiat currency, most commonly the U.S. dollar. China's financial regulators declared cryptocurrency trading services illegal and barred financial institutions from handling related transactions in September 2021.

The firm recorded $104.1 billion across 18.1 million transfers involving China's self-custodied stablecoin holdings — wallets controlled directly by their holders rather than through a centralized exchange — during the 12 months to June 2026. Stablecoin holdings turned over 33.2 times annually — more than three times the global average of 9.3 — suggesting the assets are being used as working capital.

China's crypto economy was valued at at least $176 billion in total, with domestic peer-to-peer activity accounting for 59.1% of the overall figure — a share 3.5 times its level in the previous reporting period.

South Korea: Largest Market, Squeezed Profits

South Korea ranked as East Asia's largest crypto economy with $449.1 billion in activity, an increase of 12.3% over the year to June 2026.

However, operating profits at South Korean crypto exchanges fell 78% in the first half of the year as trading activity, market valuations, and customer deposits declined. The market operates under the Virtual Asset User Protection Act, South Korea's first comprehensive virtual asset law, which took effect in July 2024.

Hong Kong: Institutional Flows Stand Out

Hong Kong stood out for institutional crypto activity. Institutional platforms accounted for 16% of service inflows in the — nearly three times the share recorded in any neighboring market — while inbound business-to-business flows reached almost $24 billion. The city introduced a licensing regime for virtual asset trading platforms in June 2023 and brought a dedicated stablecoin issuer regime into force in August 2025.

Japan: Decentralized Exchanges Take a Larger Share

In Japan, decentralized exchanges accounted for nearly 35% of crypto service activity, the highest proportion among mature East Asian markets. Chainalysis said decentralized exchange activity in the country has increased by more than 200% since 2022. Centralized exchanges in Japan have been required to register with the country's Financial Services Agency since 2017.

A Region Diverging

Taken together, the figures highlight diverging crypto markets across East Asia — from China's growing reliance on direct wallet-to-wallet stablecoin transfers to South Korea's large trading economy, Hong Kong's institutional activity, and Japan's turn toward decentralized trading venues. The data cover the 12 months to June 2026, leaving future Chainalysis reporting periods to show whether these market structures persist as regional regulatory frameworks, including Hong Kong's stablecoin regime, continue to take shape.