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The Reportedly Capital Flight From China by Cryptocurrency May Draw Regulators’ Attraction

The report titled “Crypto Assets of $50 Billion Moved From China in the Past Year” from Bloomberg claims that about $50 billion in cryptocurrency assets have left China in the past year, a possible indication that investors are dodging rules that limit how much capital they’re allowed to transfer from the nation, according to new research by blockchain forensics firm Chainalysis.

Obviously, those media have misunderstood the research as the 50 billion cryptocurrency does not refer to China, but East Asia. As the mainstream financial media, it is surprising that there are obvious mistakes in the reports from Bloomberg and CNBC.

The research from Chainalysis pointed out that 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 region, at least some of this activity represents capital flight from China represents capital flight from China.

The research emphasizes the region covers the whole East Asia. In addition to China, East Asia includes at least two large cryptocurrency markets: Japan and South Korea. Bithum, the largest exchange in South Korea and bitflyer, largest exchange in Japan, ranked fifth and eighth respectively in CMC. Though we can’t know China’s share in the 50 billion, but it certainly not the vast majority.

Cryptocurrency is not the sovereign currency of any country, and it is even difficult to identify the wallet address from which region it comes. A large Chinese investor may store BTC in the Coinbase, the US exchange, and a European player may also trade futures on the exchange operated by the Chinese team. In fact, the major players in the exchanges operated by the Chinese teams such as Binance, bybit and Kucoin come from overseas.

False reports by the media and Chainalysis may bring regulatory pressure on China’s cryptocurrency space. When the public opinion reaches a certain level, it will indeed attract the attention of the regulators. At present, there are internal disputes about the standardization of cryptocurrency in China, and the conservative tendency prevails. In the traditional planned economy, the outflow of funds will indeed draw attention from some conservatives. The media and mainstream organizations need to strengthen the efforts of clarification in order to jointly protect the crypto industry and promote its early compliance.

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