During the first half of 2021, $28.3 billion worth of unregulated funds stored in digital assets flew out of China.
This figure is 1.6 times the total outflow of digital assets in 2020, according to a report by China Business (CB).
Most of the users were mainly transacting using 4 exchanges based in China and Hong Kong.
China Business quoted the numbers from a research report titled “Digital Currency Anti-Money Laundering and DeFi Industry Security Report (First Half of 2021)”, compiled by Hangzhou Paidun Xinan Technology Co., Ltd (Paidun Technology).
These alarming numbers made the Chinese Government conscious of such outflows and strengthening its supervision. The Government has mentioned this as one of the reasons for its crackdown on the crypto industry.
Increased Supervision on Transactions
“Virtual currency is frequently used in illegal transactions such as money laundering, fraud, and gambling, and its capital path is more secretive and difficult to supervise.”
That’s why the People’s Bank of China has instructed the anti-money laundering departments to keep an eye on any suspicious transaction.
“From May to June 2021, due to the strengthening of domestic policies on mining and trading, the amount of outflows of the unregulated virtual currency fell by nearly 40%.”
Stricter Compliance is the Need
Curbing such illicit transactions would require crypto exchanges to “take up heavy responsibilities” especially when it comes to compliances, as per the report.
“More technology investment will inevitably lead to higher compliance costs. Because the scale of money laundering in virtual currency transactions is still small, but the amount seems to be relatively large in individual cases. Financial institutions usually do not invest more resources in virtual currency money laundering monitoring,”
Paidun Technology representative
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