Blockchain analytics firm, Chainalysis, has revealed that cryptocurrencies – mostly Tether’s USDT – are largely behind the current movement of funds out of China. According to the report, a lot of capital is now leaving China, and most of this is happening via USDT.
The report said that for a long time, at least 44% of all cryptocurrency transactions in East Asia involve senders and recipients that are also within the region. Chainalysis describes this as “the closest we have to a self-sustaining market” in the global crypto industry. However, this self-sustainability is starting to change.
Chainalysis says that in the last 12 months, the percentage of global crypto transactions that take place in the East Asia region has started dropping significantly. In fact, more than $50 billion worth of crypto has left China in that period.
In sending crypto out of the country, data suggests people prefer stablecoins, to hedge against the instability of other methods. Quoting Grayscale Director of Research Philip Bonello, the report states:
“Anecdotally, it appears that users in many regions use stablecoins to access US dollars for cross-border payroll, remittance, and capital flight from local currencies.”
The report suggests that this is not at all surprising because stablecoins have high “conduciveness” to capital flight. It also says that Tether’s USDT is the most popular stablecoin in East Asia.