A Primer on Bitcoin Cross-Border Flows: Measurement and Drivers

Abstract

The rapid growth of crypto assets raises important questions about their cross-border usage. To gain a better understanding of cross-border Bitcoin flows, we use raw data covering both on-chain (on the Bitcoin blockchain) and off-chain (outside the Bitcoin blockchain) transactions globally. We provide a detailed description of available methodologies and datasets, and discuss the crucial assumptions behind the quantification of cross-border flows. We then present novel stylized facts about Bitcoin cross-border flows and study their global and domestic drivers. Bitcoin cross-border flows respond differently than capital flows to traditional drivers of capital flows, and differences appear between on-chain and off-chain Bitcoin cross-border flows. Off-chain cross-border flows seem correlated with incentives to avoid capital flow restrictions.

Keywords: Crypto assets, Bitcoin, Cross-border flows, Capital flows, bitcoin blockchain, capital flow restriction, bitcoin flow, cross-border flow, Bitcoin transaction, Blockchain and DLT, Currencies, Financial activity tax, Global

JEL Classification: E42, E51, E58, F21, F32, H25