Crypto Use Cases for Liberty: Circumventing Currency Controls

This is a chapter of my book "When Crypto Makes Sense: A Guide to Use Cases."

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In November 2024, China experienced a record-high capital outflow of US$45.7 billion, according to official data tracing cross-border payments. This surge in capital flight coincides with economic uncertainty and a weakening yuan. Between November—when US President Donald Trump won—and February 2025, the yuan lost 2.2 percent of its value against the dollar.

In response, the Chinese Communist Party has applied stricter capital controls, including tighter monitoring of overseas investments. However, Chinese citizens have consistently found ways to bypass restrictions.

At the turn of the century, Chinese citizens used to resort to manipulated import/export invoicing and foreign-debt misreporting. Then they used to circumvent restrictions by masking the use of foreign currencies as travel or education expenses.

Cryptocurrencies have made capital flight easier and more accessible, thanks to their low cost, speed, and borderless nature. This pattern is not unique to China. In countries with weak local currencies and foreign-currency restrictions, citizens frequently turn to cryptocurrencies as a safeguard.