on the crypto
Chinese citizens may be inclined to use cryptocurrencies to transfer their money out of the country as blockchain analytics firm Chainalysis found that around $ 50 billion in digital currencies left China last year.
Chinese investors need to go to OTC desks to get cryptocurrencies
In a report released last week, the New York-based analytics firm explained that most of the transactions were made in stablecoins, and Tether alone accounted for $ 18 billion in outflows.
“Stablecoins such as Tether are particularly useful for capital flight, as their USD-pegged value means that users who sell large quantities for their favorite fiat currency can rest assured that it is unlikely to lose its value during buyer research phase, ”Chianalysis said in the report.
In fact, Tether has always remained popular in China since the Communist government's ban on crypto trading platforms in 2017. Traders often go to over-the-counter (OTC) desks to obtain stablecoins, usually Tether, and transfer them to cryptocurrency exchanges to include them in the trading circuit. Given the demand, the stablecoin is even sold at a premium price in the Chinese market.
Cryptocurrencies as an option to circumvent Chinese government rules
China limits the annual outflow of yuan out of the country to only $ 50.000. This forces affluent citizens to invest in overseas real estate or set up shell companies to get around the rules, and now cryptography is proving to be a much easier option.
The blockchain analytics firm, however, did not confirm whether digital currencies exiting the region had been used to move capital outward.
Popular, but controversial
Tether - here the quotation in real time - has gained popularity as many cryptocurrency exchanges have adopted this US dollar-linked cryptocurrency to offer a fiat-like trading experience. The currency itself, however, was rife with controversy.
For many years, Tether has had to respond to allegations that it does not have a one-to-one USD deposit to back up its cryptocurrency, but the company has never filed any transparent audits. Additionally, due to its ties to Bitfinex, both companies are facing lawsuits for Bitcoin price manipulation.
The companies even have an open legal dispute with the state of New York over an alleged illegal cover-up of Bitfinex leaks and other allegations. Bitfinex is a cryptocurrency exchange owned by iFinex Inc. Since 2014 it has been the largest exchange in the world, with over 10% of transactions.
