Amid an escalating trade war with the U.S., Chinese citizens moved $50 billion worth of cryptocurrency out of the country over the past 12 months, with stablecoin Tether mainly used to facilitate the outflows.
«Over the last twelve months, with China’s economy suffering due to trade wars and devaluation of the yuan at different points, we’ve seen over $50 billion worth of cryptocurrency move from China-based addresses to overseas addresses,» blockchain analysis company Chainalysis said in a report.
In comparison, Western Europe, the next largest cryptocurrency market, saw $38 billion of outflows. «We believe that at least some of this activity represents capital flight from China,» the report, published Thursday, said.
The Chinese government allows its citizens to move up to $50,000 out of the country each year. Foreign investments in real estate and other assets have allowed wealthy individuals to skirt these rules, but cryptocurrency assets may be picking up the slack amid a crackdown by authorities on these practices.
High Stablecoin Use
The use of stablecoins, which are digital currencies backed by other assets like cryptocurrency, exchange-traded commodities or fiat money to reduce volatility, is particularly high in East Asia, making up 33 percent of all value transacted on-chain, due to China's ban of direct exchanges of yuan for cryptocurrency, the report noted.
«Stablecoins are particularly useful for capital flight, as their fiat currency-pegged value means users selling off large amounts in exchange for their fiat currency of choice can rest assured that it’s unlikely to lose its value as they seek a buyer,» the report said, noting that Tether, which is pegged to the U.S. dollar, is disproportionately popular in East Asia – accounting for 93 percent of transactions – compared to other regions.
In total, over $18 billion worth of Tether moved from East Asia addresses to those based in other regions over the last 12 month, Chainalysis said.
