Field visit to Yiwu: What is the heat of stablecoin cross-border payments?

Author: Bian Wanli

The popularity of stablecoins remains high, with attention gradually shifting to practical application scenarios. Recently, there have been market reports indicating that Yiwu has cases of accepting stablecoin payments for foreign trade goods, making it once again the focus of public attention.

According to a research report by Huatai Securities, "In Yiwu, the world’s small commodity center, stablecoins have become an important tool for cross-border payments. Blockchain analysis company Chainalysis estimates that in 2023, the on-chain stablecoin flow in the Yiwu market exceeded 10 billion USD." There are also posts online stating, "Over 3,000 merchants in Yiwu are already using USDT and other stablecoins for payments, with monthly transactions exceeding 1 billion USD, directly saving nearly 10 million RMB in fees!"

So, what is the actual situation regarding the use of stablecoins in Yiwu?

To get to the bottom of the matter, reporters from the 21st Century Business Herald conducted field research on the use of stablecoins in Yiwu.

When asked whether stablecoins can be used for payments, most merchants stated that they had not heard of stablecoins and did not understand them; some merchants raised concerns about their compliance, costs, etc.; only a few merchants supported receiving payments in stablecoins.

Most merchants report that they do not understand stablecoins.

Yiwu International Trade City is the largest small commodities distribution center in the world. Since the first generation of small commodity markets in 1982, it has undergone six relocations, ten expansions, and five transitions, gradually developing into its current scale. Data shows that it has an operating area of over 6.4 million square meters and 75,000 business units; it brings together 26 major categories and over 2.1 million types of small commodities. Every year, more than 560,000 foreign merchants come to Yiwu for procurement, and over 15,000 foreign merchants from more than 100 countries and regions choose to stay in Yiwu, with their products being sold to 233 countries and regions worldwide.

Yiwu International Trade City Photo / 21st Century Business Herald

Yiwu International Trade City Photo / 21st Century Business Herald

Stepping into Yiwu International Trade City, guests come and go in an endless stream, but I did not see the hot phenomenon of stablecoin usage as rumored in the market. The reporter, posing as a consumer, inquired with merchants whether stablecoins or U (the colloquial term for stablecoins like USTD, USDC) could be used for payment. The majority of merchants' first reaction upon hearing this was: "What payment?", "What is U payment?", "I don't know, I don't understand stablecoins, I've never heard of them."

The so-called "stablecoin" is a digital asset that maintains price stability by being pegged to reserve assets, such as fiat currency like the US dollar. Compared to traditional cryptocurrencies like Bitcoin and Ethereum, its price is linked to low-volatility assets and is not directly determined by market supply and demand. This stability makes it a tool for payment and value storage within on-chain ecosystems.

Due to the lack of geographical restrictions on digital currency transactions and lower regulatory levels compared to traditional finance, the convenience of cross-border transfers with "stablecoins" is relatively high. For example, traditional cross-border wire transfers usually take 2-3 business days and have high transfer fees. In contrast, USDT (a type of stablecoin) has a transaction delay of about 2 minutes and lower transfer fees. This is also a core reason why some market participants are optimistic about the cross-border use of stablecoins.

During the reporter's visit, some merchants expressed interest in stablecoins or had a certain level of understanding.

Some foreign trade merchants admit that some overseas customers have asked whether they can use USTD or USDC for payment.

A merchant with a study abroad background told reporters, "I will pay attention to stablecoins, but I haven't used them yet."

Some merchants also said, "The cost is too high, we won't use it."

Some merchants also raised the question, "Is it compliant? Will the card be frozen?"

However, there are indeed a few merchants who explicitly state that stablecoins can be used for payment, but they are reluctant to provide more details.

Several informed sources pointed out that it is possible for some foreign trade merchants with wallets (referring specifically to virtual currency wallets) to privately use stablecoins for transactions. For example, some merchants trade cryptocurrencies themselves and may hold stablecoins, creating a certain demand for stablecoins. Other merchants may need to find U merchants (intermediaries engaged in the dual exchange business of fiat currency and stablecoins) to exchange them for fiat currency (US dollars or Chinese yuan).

A local bank employee in Yiwu told reporters, "In the past two years, some intermediaries have emerged in Yiwu. These intermediaries buy USDT stablecoins at prices below $1, such as $0.98-$0.99, and then sell them to merchants in need of stablecoins at prices above $1, such as $1.03. There are indeed some merchants with demand, especially when doing business with buyers from countries and regions with extremely volatile local currency exchange rates, and they occasionally use this method." For merchants, exchanging fiat currency for stablecoins and converting the stablecoins back to fiat currency will also incur costs.

There are rumors online that "more than 3,000 merchants in Yiwu are using USDT and other stablecoins for payments, with a monthly turnover exceeding $1 billion," and that "in Yiwu, the world’s small commodity center, stablecoins have become an important tool for cross-border payments," estimating that "the on-chain stablecoin flow in Yiwu's market will exceed $10 billion in 2023." In response, a local individual who has been closely following virtual currencies said, "To my knowledge, there are no large numbers of merchants in Yiwu using stablecoins; at least the people around me are not willing to settle with stablecoins."

Another entrepreneur focused on cross-border e-commerce admitted, "It cannot be ruled out that some cross-border e-commerce businesses use stablecoin for payments, but most should still be settling using traditional banks or third-party payment methods."

The reporter noticed that recently some investors have been asking questions on the interactive platform about Yiwu Commodity City (SH600415): A while ago, an expert mentioned at a stablecoin forum that 30% of the transaction volume in Yiwu commodities is already using the stablecoin USDT. Can you provide information on whether this data is accurate, and if not, what is the company's current situation regarding this?

The company responded: The company operates the world's largest small goods trading market, maintaining trade relations with over 230 countries and regions, among which the trade with countries jointly built under the "Belt and Road" initiative accounts for a significant proportion, inherently possessing a vast and high-frequency cross-border trade settlement scenario. The company actively explores the use of financial technology to enhance the level of trade facilitation. Innovative payment tools such as stablecoins have the potential to provide more efficient and low-cost cross-border payment solutions for global merchants, especially small and micro enterprises, aligning with our mission to serve the real economy. The company is committed to combining its vast advantages in real trade scenarios with financial technology innovation to create greater value for global merchants and contribute to the circulation of daily consumer goods.

At the same time, the small commodity city also stated that the company currently does not have information on the usage of stablecoins in the Yiwu market and related data. If there are any developments in this regard, investors are advised to pay attention to the company's subsequent announcements.

The use of stablecoins is influenced by multiple factors.

Emerging technologies such as blockchain and distributed ledgers are driving the vigorous development of central bank digital currencies and stablecoins, achieving "payment instant settlement" and fundamentally reshaping the traditional payment system, significantly shortening the cross-border payment chain. Compared to traditional cross-border payment models, the core advantage of stablecoins lies in directly bypassing the multi-layer intermediary structure based on agency behavior in traditional models, thereby shortening settlement time and saving transaction costs.

Specifically, stablecoins enable peer-to-peer value transfers through a shared distributed ledger, compressing a process that would typically require multiple institutions into a single or a few on-chain transactions, thereby reducing settlement time from several days to mere minutes or even seconds, and lowering costs to predictable network transaction fees. At the same time, in terms of cost structure, traditional systems rely on networks like SWIFT, which involve message communication fees, forex transaction costs, and liquidity provision costs, whereas stablecoins leverage blockchain architecture, minimizing transaction costs.

Despite the many advantages of stablecoins in cross-border payment scenarios, their large-scale implementation is not as thriving as envisioned.

Merchants who have been paying attention to virtual currencies for a long time, such as Chen Jun (pseudonym), said, "Foreign trade companies can receive export tax rebates using traditional settlement methods, which offers potential benefits, leading merchants to be reluctant to use stablecoins."

In simple terms, export tax rebates refer to the refund of value-added tax and consumption tax that enterprises have already paid during the production and circulation stages, returned to them after the goods are exported. According to regulations, the export tax rebate rates for different types of goods vary, generally ranging from 6% to 13%, which means that export tax rebates can become a profit point for enterprises.

As an international convention, export tax rebates can reduce the overall tax burden of exported goods to zero, effectively avoiding international double taxation. Export tax rebates are beneficial for enhancing the competitiveness of domestic products in the international market and are adopted by countries around the world. Existing data shows that the total amount of export tax rebates (exemptions) in Yiwu reached 12.071 billion yuan in 2023, a year-on-year increase of 14.78%. Among them, the export tax rebates processed amounted to 10.625 billion yuan, a year-on-year increase of 7.39%, marking the first time that export tax rebates have surpassed 10 billion yuan.

Chen Jun further pointed out that "merchants have a relatively large demand for funds. The data left by traditional payment methods, such as bank transaction records, can serve as the basis for bank loan reviews, helping merchants obtain loans from banks to maintain normal business operations. At the same time, export orders and bank transaction records can also serve as the basis for applying for exhibition booths at large trade shows. Generally, the larger the export scale, the larger the booth that can be obtained."

Large exhibitions similar to the Canton Fair are an important channel for foreign trade enterprises to acquire customers and sign contracts. Taking the data from the 137th Canton Fair in 2025 as an example, as of May 4 (the same below), nearly 290,000 overseas buyers from 219 countries and regions attended, an increase of 17.3% compared to the 135th Canton Fair (the same below); the intended export transactions on site amounted to 25.44 billion USD, an increase of 3%.

In addition, while using stablecoins for payments currently incurs almost zero fees, there are still some practical issues to consider. On one hand, there are cost issues, including the costs associated with exchanging stablecoins for fiat currency and the inevitable foreign exchange settlement costs. On the other hand, there are risk issues, as there may be money laundering risks and the possibility of account freezes, which can significantly impact the normal operations of foreign trade enterprises.

Yiwu International Trade City Photo / 21st Century Business Herald

It is worth noting that regarding whether to prepare to apply for a stablecoin license in Hong Kong, Yiwu Small Commodity City is also closely monitoring the regulatory framework in Hong Kong in the stablecoin sector, and may choose to submit an application in the future through its subsidiary "Yi Payment".

On June 18, the Small Commodity City stated on the interactive platform: "We welcome and support Hong Kong's positive progress in the regulatory framework for stablecoins. The company's cross-border payment platform 'Yiwu Pay' will continue to pay attention to the relevant regulatory process and will actively assess and submit relevant applications as soon as the regulations are clarified and the path is unobstructed."