Image: iStock

Over $50 billion in cryptocurrency has flowed out of China over the past 12 months amid the country’s trade conflicts, according to a new study cited by a Bitcoin.com report.

East Asia is the world’s largest cryptocurrency market, accounting for about 31% of all crypto transactions in the last 12 months.

In an excerpt from its upcoming “2020 Geography of Cryptocurrency” report, Chainalysis explained that more cryptocurrency was sent from East Asia to foreign addresses than from other regions.

“Over $50 billion traveled from East Asia addresses to addresses in other regions, compared to just over $38 billion for Western Europe, the region next in terms of value sent out of the region,” the firm reported.

Most of the cryptocurrency outflow was from China, Chainalysis said, noting that Beijing only allows citizens to move the equivalent of $50,000 out of the country each year. However, wealthy Chinese have found ways to circumvent the restrictions, such as via real estate and shell companies, but the authorities have been clamping down on such methods.

“Cryptocurrency could be picking up some of the slack,” the firm noted, adding: “Over the last 12 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.

“We can think of $50 billion as the absolute ceiling for capital flight via cryptocurrency from East Asia to other regions.”

The Bitcoin Express

Crypto analyst and RT TV presenter Max Keiser commented on Twitter that wealthy Chinese “are doing a runner” and that the outflow signals the beginning of the end of the nation-state era.

“It’s no secret. Chinese are doing a runner, taking their wealth out of China using the Bitcoin Express The government (like all governments) is powerless to stop it. The era of the nation-state is finished.”

Deteriorating US-China relations

Relations between the US and China have massively deteriorated in recent weeks as the two powers trade jabs over issues such as the Covid-19 pandemic, Hong Kong, and Xinjiang.

Value sent from East Asia between June 2019 and 2020. Cryptocurrencies included are BAT, BCHBNBBTCETH, GUSD, LTCMKR, OMG, PAX, TUSD, USDC, and USDT.

“A robust professional market” and an “extremely active” retail market drive East Asia’s cryptocurrency trading volume, Chainalysis pointed out. Approximately 90% of all crypto volume transferred from the region in any given month is “professional-sized” – transactions exceeding $10,000 in value.

East Asian crypto pros also appear to trade a broad range of assets frequently for speculation purposes, unlike in North America, where pros focus more on bitcoin and hold for longer, Bitcoin.com reported.

“The liquidity of the East Asia market also makes it the closest we have to a self-sustaining market,” Chainalysis said.

Stablecoins

Most of the transactions in China were made in stablecoins, and Tether alone accounted for $18 billion of the outflows.

“Stablecoins like Tether are particularly useful for capital flight, as their USD-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,” Chainalysis stated in the report.

Tether remained popular in China following Beijing’s ban on crypto trading platforms in 2017. Traders often go to over-the-counter desks to buy stablecoins, usually Tether, and send them to crypto exchanges for trading, Finance Magnates reported. Given the demand, the stablecoin is even sold at a premium price in the Chinese market.