$50 Billion Worth Cryptocurrency Transferred from China to Foreign Accounts

  • The Chainalysis report has suggested that not all of the transferred $50 billion cannot be considered as capital.
  • The government has imposed a limitation of $50000 on purchasing foreign currency per year.
  • it was suggested that the heavy transfer of USDT stablecoin was to some extent an outcome of high volatility of the cryptocurrency.

Recent Chainalysis reports suggest that cryptocurrencies worth $50 billion have flex from Chinese addresses to foreign addresses this year alone. Over the last few months, the relation between China and the US has degraded to a great extent due to trading tensions and has affected the price of the yuan.  However, the Chainalysis report has suggested that not all of the transferred $50 billion cannot be considered as capital. But at most it can be considered an absolute maximum of capital flight through cryptocurrency from Eastern Asia to other regions. 

Chinese Investors are Bypassing the $50000 Limit

China’s cryptocurrency regulation is a bit confusing. Back in 2017, the government banned all sorts of cryptocurrency blockchain including the Initial Coin Offerings (ICOs) and Chinese crypto exchanges. However, more recently the Chinese president, Xi Jinping has embraced blockchain technology. And the government has started piloting tests for the Central Bank Digital Currencies (CBDCs). 

More importantly, the government has imposed a limitation of $50000 on purchasing foreign currency per year. This means investors are crossing the limits and investing more than they are actually allowed. Previously, many citizens had bypassed the law by investing in real estates and other assets. A reason why the government had taken serious steps to regulate foreign investments. 

Sole Cryptocurrency Transferred in 12 Months is USDT

Surprisingly, Chinese investors are using the stablecoin Tether as the sole cryptocurrency to flee away their money to overseas addresses. Chainalysis has revealed that over the last 12 months, USDT worth $18 million have been transferred from East Asia addresses to overseas addresses. Again, the cryptocurrency agency warned that all of it might not be capital flight. This can be explained by USDT’s nature. It’s value is pegged to the US Dollar and this means the volatility associated with it is relatively lesser and this helps the investors because the asset that is being moved faces less price swings. 

China’s Degrading Relation With the US and Decreasing Yuan Value

As mentioned above the equities in both the US and China have been losing price and so has China’s fiat currency. In such situations a capital flight is likely. However, it was suggested that the heavy transfer of USDT stablecoin was to some extent an outcome of high volatility of the cryptocurrency. Chainalysis prompted that everyday miners are readily converting freshly minted coins into USDT stablecoin and are transferring them to accounts. Certain news reports have also revealed spikes in Tether activity recently.

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