Yiwu Merchants Shun Stablecoins Over Compliance Concerns

An investigation into the use of stablecoins for cross-border payments among 3,000 merchants in Yiwu has revealed a stark contrast to media claims, with only 0.3% of merchants accepting stablecoins due to compliance and profit concerns. The investigation, which covered 6.4 million square meters of market space, found that most merchants prefer traditional banking payments to avoid losing tax refunds and to maintain compliance with regulations.

Despite claims of a $10 billion monthly volume in stablecoin transactions, the reality is that merchants are hesitant to accept stablecoins due to the risk of losing 13% tax refunds, which amount to $1.7 billion annually. Traditional payment systems generate bank records, which are crucial for loan applications and exhibition space allocations. Merchants fear that losing these records could result in zero credit loan quotas and missed order opportunities.

China’s central bank has explicitly banned virtual currency-related businesses, and receiving stablecoins through overseas wallets can trigger foreign exchange monitoring alerts. In March 2025, one merchant’s corporate account was frozen for two months due to USDT receipts linked to money laundering, resulting in over $280,000 in lost orders. This incident highlights the risks associated with accepting stablecoins and the importance of compliance with regulations.

While the use of stablecoins in Yiwu has been largely debunked, there are still some merchants who use them as a lifeline during currency fluctuations. For example, during the 23% plummet of the Turkish lira in 2024, some merchants used USDT to lock in USD settlements and saved $52,000 in profits within a single month. However, the high-profit underground world of intermediaries, who exchange fiat currency for stablecoins at a spread of 3-5%, has also been exposed.

The investigation concludes that the payment revolution is not about complete disruption but rather a precise balance between efficiency, compliance, and profit distribution. The true path forward for global trade’s capillary system is gradual improvement within regulatory frameworks, as demonstrated by the growing market share of digital yuan and Hong Kong licensing, which offer compliant alternatives. The answer is clear: gradual improvement within regulatory frameworks is the true path forward for global trade’s capillary system.