China Proposes Crackdown on Tether Stablecoin Over Illegal Forex Trading
Supreme Court recently issued a warning against Tether stablecoin for its utility as a medium of exchange. The People’s Procuratorate noted that USDT is illegally used as an exchange token between local and foreign currency.
China Imposes Restrictions on Stablecoins
The authorities have added other similar stablecoins in the same notification for trading on foreign exchanges. Supreme People’s Procuratorate (SPP) is responsible for legal persecution within its jurisdiction.
The court advised the public to use USDT as an intermediary currency for trading Chinese fiat currency with others. The notification directed the officials to impose stricter restrictions on USDT for usage in cross-border forex transactions.
SPP and SAFE Ask Public Officials to Refrain from Using USDT for Forex Trade
SPP and SAFE have issued a joint statement asking the public officials to refrain from using USDT as a medium of exchange for transactions between local and foreign fiat currencies. Authorities retained that local branches need to establish active communication channels for detecting foreign exchange purchases.
Furthermore, the statement also retained that relevant authorities should impose fine on defaulters if found guilty of illegal exchange transactions and other types of foreign exchange-based illicit activities.
The law enforcement agencies in China have retained that any activity involving Yuan falls outside of legal allowance. As per the announcement, trading platforms shall not offer technical support or exchange services against Yuan.
The notification quoted a lawsuit with defendant Zhao Dong. Dong is the founder of OTC cryptocurrency trading platform RenrenBit. The platform was charged with offering local and cryptocurrency trading services. On this account, he received a jail sentence of 7 years and 2.3 million yuan ($322,000) fine.
Tether Stablecoin Faces Ban in China
Chinese authorities have implemented a comprehensive ban on all digital currency trading activities within the nation in 2021. The ban was inclusive of mining, advertisement, and trading activities.
However, law enforcement agencies within the nation have continued to install a crackdown on USDT transactions since that time. There has been an instance of a nine-month imprisonment sentence for a local digital currency investor who was found guilty of buying 94,988 Yuan ($13,067) of USDT in 2023.
Chaoyang District People’s Court ruled in 2022 that stablecoins such as USDT should not be issued for salary payments. The ruling was issued after one employer was apprehended for paying the workers in the form of USDT.
Meanwhile, local media outlets noted that the digital currency market of China has remained one of the strongest since 2022. Chinese developers have continued to mine Bitcoin despite a state-wide ban remaining the second-highest hash rate generator in the world.
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