Chinese nationals might be inclining towards cryptocurrencies for transferring their money outside the country as blockchain analytics firm Chainalysis found out that around $50 billion in digital currencies left last year.
On a report published on Thursday, the New York-headquartered firm detailed that most of the transactions were made in , whereas Tether alone accounted for $18 billion of the outflows.
“Stablecoins like Tether are particularly useful for capital flight, as their USD-pegged value means users selling off large amounts in exchange for their fiat currency of choice can rest assured that it’s unlikely to lose its value as they seek a buyer,” Chianalysis stated in the report.
Indeed, Tether always remained popular in China following the communist government’s ban on crypto trading platforms in 2017. Traders often head to over-the-counter (OTC) desks to get their hands on stablecoins, usually Tether, and transfer them to crypto exchanges for trading. Given the demand, the stablecoin is even in the Chinese market.
China limits the yearly outflow of yuan outside to the country to only $50,000. This forces the wealthy nationals to invest in overseas real estate or create shell companies to circumvent the rules, and now crypto is turning out to be a much easier option.
The blockchain analytics firm, however, did not confirm if the outflowed digital currencies from the region were used for moving capital outside.
Popular, yet controversial
Tether gained popularity as many crypto exchanges adopted this US dollar-pegged crypto to offer fiat-like trading experience. The company itself, however, was riddled with controversies.
For many years, Tether faced allegations of not maintaining a one-to-one USD chest to back its cryptocurrencies, but the company never conducted any transparent audit. Moreover, due to its ties with Bitfinex, both the companies are facing lawsuits for .
The companies are even fighting the state of New York for an allegedly illegal coverup of Bitfinex losses and a few other charges.