{"id":1303,"date":"2020-09-16T13:21:00","date_gmt":"2020-09-16T13:21:00","guid":{"rendered":"https:\/\/depthtrade.com\/?p=1303"},"modified":"2021-06-02T16:59:51","modified_gmt":"2021-06-02T16:59:51","slug":"capital-flight-chinese-are-making-increased-use-of-cryptocurrencies","status":"publish","type":"post","link":"http:\/\/localhost\/depth\/capital-flight-chinese-are-making-increased-use-of-cryptocurrencies\/","title":{"rendered":"Capital flight: Chinese are making increased use of cryptocurrencies"},"content":{"rendered":"\n

Capital flight from the Middle Kingdom has increased again recently. In the meantime, the Chinese seem to be making use of the cryptocurrency markets to an increased extent in order to circumvent the existing capital controls at home. But there are other reasons for this development. Tether, in particular, is enjoying increased popularity – despite the fact that the issuers recently came under the scrutiny of prosecutors.<\/em><\/p>\n\n\n\n

A growing number of Chinese seem to be using the cryptocurrency market to transfer capital from home to abroad. A new report by Chainalysis shows<\/a> that the amounts transferred abroad amounted to the equivalent of USD 50 billion.<\/p>\n\n\n\n

Capital flight amounting to USD 50 billion?<\/strong>
Cryptocurrencies appear to be a proven way for the Chinese to circumvent capital controls imposed at home to an increasing extent. In the past, Chinese nationals used other means to put money on the side by acquiring real estate abroad and other assets overseas.<\/p>\n\n\n\n

However, cryptocurrency markets now appear to be outpacing these aforementioned areas. According to Chainanalysis, the capital flight from the Middle Kingdom observed in the full year of 2019 with the help of cryptocurrency markets amounted to a handsome $50 billion.<\/p>\n\n\n\n

It should be noted at this point that the company Chainalysis itself sells monitoring software to companies and governments around the globe. In the case of the amount of 50 billion U.S. dollars, it is not entirely, but mostly capital flight from China, as it is said.<\/p>\n\n\n\n

Tether preferred<\/strong>
Among other things, the cryptocurrency Tether, which it says is pegged to the U.S. dollar, is proving to be one of the preferred instruments. Tether is a favored instrument of first choice and Chinese nationals simply because its volatility and susceptibility to fluctuation is not so high compared to other cryptocurrencies, it said.<\/p>\n\n\n\n

And so, among all cryptocurrencies in use In East Asia, the share attributable to Tether amounted to $18 billion over the course of the last twelve months. Even if this is not entirely flight money, Chainanalysis states that money flowing overseas from China has increased significantly again.<\/p>\n\n\n\n

Xi Jinping and pressure on renminbi drive popularity of cryptos<\/strong>
The use of Tether had also increased recently in the face of individual events. For example, China’s President Xi Jinping had announced in October last year that he would officially back the use of blockchain technology, on which most cryptocurrencies are based, in the future.<\/p>\n\n\n\n

From China’s perspective, it could also be observed that there would be an increased use of cryptocurrencies such as Tether if the domestic currency yuan\/renminbi came under pressure in relation to the US dollar.<\/p>\n\n\n\n

Prosecutors target Kypto exchange and Tether issuers<\/strong>
Tether itself is still surrounded by numerous controversies. That’s because in April 2019, prosecutors had accused cryptocurrency exchange Bitfinex and Tether’s issuer, Tether Limited, of concealing losses totaling $850 million. Both Bitfinex and Tether Limited have repeatedly denied these allegations.<\/p>\n\n\n\n

ICO ban on cryptocurrencies does not prevent Xi\u2026<\/strong>
The People’s Republic of China had tightened its grip on cryptocurrencies in recent years. In 2017, Beijing’s leaders issued a fundraising ban in favor of cryptocurrencies. So-called ICOs have been banned in the country ever since. However, as previously mentioned, this did not stop Xi Jinping from officially backing blockchain technology.<\/p>\n\n\n

DepthTrade Outlook<\/h2>\n\n\n

The reason for this will probably be that China’s central bank, the People’s Bank of China, is currently working on the development of its own cryptocurrency, which will probably be declared the ultimate in this field in the Middle Kingdom when the time comes.<\/p>\n","protected":false},"excerpt":{"rendered":"

Capital flight from the Middle Kingdom has increased again recently. In the meantime, the Chinese seem to be making use of the cryptocurrency markets to an increased extent in order to circumvent the existing capital controls at home. But there are other reasons for this development. Tether, in particular, is enjoying increased popularity – despite …<\/p>\n","protected":false},"author":7,"featured_media":1304,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[26,27],"tags":[62,72],"yst_prominent_words":[],"yoast_head":"\nCapital flight: Chinese are making increased use of cryptocurrencies - DepthTrade<\/title>\n<meta name=\"description\" content=\"Capital flight from the Middle Kingdom has increased again recently. In the meantime, the Chinese seem to be making use of the cryptocurrency markets to an increased extent in order to circumvent the existing capital controls at home. 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