Chinese fentanyl makers find new U.S. market in peptides

• They're increasingly using cryptocurrency, because traditional banks and credit card processors won't allow the sale of unregulated substances.

The latest: The blockchain analysis firm Chainalysis recently found proceeds from online peptide sales in the U.S. were flowing to to China-based manufacturers of chemicals used to produce synthetic opioids like fentanyl.

• It's a fast-growing source of business. Crypto payments to gray-market peptide vendors, many of which are part of the fentanyl business, totaled $27 million in the first quarter of this year, up nearly 150% from Q4 2025, per Chainalysis.
• TRM Labs, another blockchain analytics company, has observed a similar pattern of China-based chemical companies that produce fentanyl precursors turning to the peptide business.

Between the lines: The findings may fuel arguments to ease Food and Drug Administration regulations that now restrict U.S. compounding pharmacies from making peptides because of a lack of studies on their health effects.

• An FDA advisory committee is due to meet this month to consider including several peptides on a list of substances that can be used in compounding.
• FDA scientists found that there wasn't enough evidence to evaluate the effectiveness of peptides for the stated use of wound healing, which could clash with Health Secretary Robert F. Kennedy Jr.'s push to promote the proteins.

Some peptide manufacturers say the China connection underscores the need for more controls.

• "I'm gobsmacked by the risks people are taking," said Nora Khaldi, CEO of Nuritas, which specializes in developing peptides from natural sources. "No matter how great a molecule is, the risk you're taking by using and taking when you don't know the quality.… It's mind blowing."

Zoom in: Chainalysis found one China-based company — which had been previously identified through its digital crypto wallet as selling fentanyl precursors — posted on message boards selling cosmetic and weight loss peptides.

• "For these manufacturers that decided to pivot, it was really a business decision," Chainalysis senior intelligence analyst Sara Graham.
• "They departed from a trade in which they could be sanctioned or indicted by the U.S. and reappeared in a very lucrative scene that has widespread buy-in."

Financial transactions and research of products still sold on hidden pages of these company's websites show they are still very likely selling fentanyl precursors to drug cartels, said Alois Afilipoaie, senior blockchain intelligence analyst for TRM, a blockchain intelligence company.

• "They are still keeping fentanyl and have adopted peptides … given the fact that there is huge demand in the West," he said.

Threat level: Chainalysis' research indicates that many peptide buyers are using crypto for the first time, and are likely unaware of exactly who the sellers are. There also was evidence of underage users seeking ways to bypass checks to access the market.

• "These people may never have considered ever pursuing a drug from a dark net market, but they're hearing about peptides," she said. "They may not think that they're super harmful, so they're going to these brokers in China."

The findings track with what Quicksilver Scientific, which sells certain peptides as nutritional supplements, has seen happen in the industry.

• There's a hugely stratified chemical industry in China, and for years, manufacturers with good reputations for creating high-quality products largely owned the peptide business. That's changed drastically, said Chris Shade, Quicksilver's CEO.
• "The market just blew up for these things," Shade said. "There was this rush to get into peptide supply … that's where these second- and third-tier guys came in, and I would hear people say 'I got this stuff, it didn't work.'"

What we're watching: The advisory panel vote could alter the supply chain by allowing compounders to mass produce some peptides.

• The panel includes a number of experts who stand to benefit from from the agency endorsing broader use of peptides, Politico reported.