China’s Financial Control Eroded by Rising Crypto-Based Money Laundering

• Chinese criminal networks use Bitcoin and Tether to bypass capital flight controls.
• Cryptocurrencies facilitate global money laundering, including fentanyl trade.
• Experts call for international cooperation to combat cryptocurrency-based crime.

China’s efforts to prevent capital flight are being undercut by its criminal networks, which are increasingly using cryptocurrencies like Bitcoin and Tether (USDT) to move money across borders. According to new research by Kathryn Westmore, a senior research fellow at the Royal United Services Institute, digital assets are now central to China’s underground financial system.

The paper by Westmore demonstrates the way Chinese Money Laundering Organizations (CMLOs) are incorporating cryptocurrencies into their activities. Criminals steal illegal money in exchange for computer resources like Bitcoin or USDT. The virtual currencies facilitate the circumvention of the capital control limitations imposed by China that attempt to keep money within the country without detection.

China’s Laundering Groups Use Crypto for Global Fentanyl Trade

This tendency is introduced during the increase of international crypto-crimes. In 2025, investors had been deprived of more than $2.3 billion in cryptocurrency frauds. In 2024, Chainalysis reported that infamous pig-butchering scams defrauded their victims of over four billion dollars. The work of Westmore provides another layer, in that CMLOs are facilitating global criminal activities as well, including fentanyl trade.

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As outlined in the paper, the drug proceeds, primarily from the United States, are exchanged into Bitcoin or USDT. These digital resources are then moved to offshore accounts belonging to some of the rich Chinese clients. This system enables the criminals to transport money across borders in a discreet way, unlike traditional banking systems that are highly supervised by governments.

Global Crypto Money Laundering Requires International Collaboration

Money laundering is not the only activity in which cryptocurrencies are utilized. A vast majority of Chinese firms that supply fentanyl precursor chemicals accept Bitcoin and USDT as payment. This characterizes the digital currencies as one of the primary means of resolving transactions in the synthetic opioid trade of the world. Blockchain analytics company Elliptic has followed on-chain transactions to payments in China to suppliers of fentanyl networks.

Westmore cautions that the problem is so large that no one government can address it individually. Money laundering of cryptocurrency is a global issue, and thus, national authorities find it difficult to fight this practice. 

With the widespread integration of cryptocurrencies into criminal networks, there is a call among the experts to employ international collaboration to tackle the issue that has escalated to a higher level.

Europol organized a cybercrime syndicate in October, which dismantled and fabricated more than 49 million fake online accounts. These accounts were utilized in laundering illegal money and having financial fraud. The event emphasizes the magnitude of crimes on the crypto front and the necessity of a global action to curb this menace.

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