Chainalysis: China Is Moving Its Crypto to Foreign Accounts
It looks like China is playing by its own financial rules. According to a new report released by blockchain security firm Chainalysis, the country moved as much as $50 billion in cryptocurrency out of the country last year as a means of avoiding present sanctions.
China Has Its Own Agenda
As it stands, residents of China are only allowed to purchase up to $50K in foreign currency. Previously, many wealthy members of the nation sought to get around this rule by investing in real estate and other ventures that are more than the set amount, though government regulators have seemingly cracked down on these individuals and others looking to get past prying eyes.
Among the foreign currencies at bay are various cryptocurrencies such as bitcoin. As it is not a national currency of China or a neighboring region, it is widely considered a foreign asset, and it seems many have tried to avoid present risks and rules by investing their money into digital currencies.
The Chainalysis report says:
Cryptocurrency could be picking up some of the slack. Over the last 12 months, with China’s economy suffering due to trade wars and the devaluation of the yuan at different points, we’ve seen over $50 billion worth of cryptocurrency move from China-based addresses to overseas addresses. Obviously, not all of this is capital flight, but we can think of $50 billion as the absolute ceiling for capital flight via cryptocurrency from East Asia to other regions.
One of the moves that seem to be getting a lot of attention is the fact that many individuals are using the popular, yet controversial stable currency Tether to move their assets over. Tether is widely considered to be the reason behind the dramatic bitcoin price drop that occurred in 2018. University of Texas professor John Griffin published a report suggesting that many players in the crypto space used Tether to potentially purchase bitcoin the minute it incurred a slight stumble.
This ultimately tied BTC to the U.S. dollar, which is what allowed it to stay up for so long the year before. This is a prime example of crypto price manipulation.
The Chainalysis report says:
In total, over $18 billion worth of Tether has moved from East Asia address to those based in other regions over the last 12 months. Again, it’s highly unlikely that all of this is capital flight.
The document says that spikes in Tether occurred regularly in 2019, though it doesn’t specify if these spikes were the results of China moving its money around. It explains:
Equities in both the U.S. and China were still losing value at this time, as was the yuan itself. It’s possible that the economic tumult may have prompted some capital flight from China, though much of the Tether movement could have been East Asia-based cryptocurrency traders moving their holdings to international exchanges.