China’s Capital Outflow via Cryptocurrency Stands at $11.4 Billion in 2019
China’s capital flight through cryptocurrencies trading stands at $11.4 billion in 2019, according to a recent report by China-based blockchain security firm PeckShield.
In the Digital Asset Antimony Laundering Research Report, PeckShield’s security team reviewed the status of “illegal or unregulated” transactions using virtual assets in recent years.
It found that the total sum of the capital outflow via cryptocurrencies over the past three years, together with the amount of $17.9 billion in 2018 and $10.1 billion in 2017, has exceeded 1% of the country’s $3 trillion foreign exchange reserves. By contrast, China’s total outbound direct investment in 2018 was $143 billion.
Apart from the capital flight via cryptocurrencies, the report also goes through the major security incidents in crypto exchanges over the past three years and the transaction volume in dark web.
As per the report, losses caused by security incidents in crypto exchanges have been increasing year by year. In 2017, 11 major security incidents broke out, resulting in a total loss of $294 million; 46 major security incidents in 2018 led to a total loss of $4.758 billion and 63 major security incidents in 2019 with a total loss of $7.679 billion.
So far, there have been around 60,000 dark web sites running TOR, about half of which are involved in illegal transactions. The demand for transactions in the dark web market is so great that new black markets will soon emerge immediately after the shutdown of large ones, and the total volume of transactions taking place there is still growing.
According to the report, a total of 330,000 bitcoins flowed into the dark web in 2018 and 540,000 in 2019, totaling $2.1 billion and $3.9 billion, respectively. Some of these bitcoins were transferred to exchanges to be laundered or exchanged for fiat money and other cryptocurrencies. The PeckShield study found that 29,471.64 bitcoins flowed directly from the dark web to major exchanges in 2019, valued at $216 million calculated by the prices at the time of the trade.
The data in the report suggest that regulators should get their act immediately on anti-money laundering measures and crypto exchanges speed up compliance. Over the past few years, governments and international agencies have been studying how to regulate crypto assets. For example, in June 2019, the Financial Action Task Force (FATF) stipulated that virtual asset service providers should be registered or licensed and monitored for due diligence compliance, record-keeping, and reporting of suspicious transactions.