China calls for crackdown on Tether stablecoin amid illegal forex trade
Chinese authorities are moving to use cryptocurrencies like Tether (USDT) more than two years after banning major cryptocurrencies like Tether (USDT).
China's Supreme People's Procuratorate (SPP), the highest national agency responsible for legal proceedings in mainland China, has warned against using USDT as an intermediary to trade the Chinese yuan against other fiat currencies.
The agency issued a joint statement with the State Administration of Foreign Exchange (SAFE) on December 27, urging local authorities to implement stricter measures against the use of Tether stablecoin in cross-border foreign exchange transactions.
In the statement, SPP and SAFE declared that the use of Tether as a domestic and foreign currency exchange is illegal. According to the law, their domestic branches should improve coordination procedures to punish “fraudulent foreign exchange purchases, illegal foreign exchange transactions and other illegal and criminal activities related to foreign exchange,” he said.
Chinese authorities have emphasized that any activity involving cryptocurrency exchanges with the yuan is illegal, including indirect involvement such as technical support or the provision of exchange services.
The statement cited a criminal case against Chinese citizen Zhao Dong – the founder of the crypto trading desk RenrenBit – a sales order that facilitated crypto and local currency trading. The trader was sentenced to seven years in prison and a 2.3 million yuan ($322,000) fine for buying USDT using UAE dirhams and selling them to mainland China in yuan.
Related: Chinese Web3 VC to launch 10B accelerator fund: Report
The news comes more than two years after mainly Chinese authorities imposed major restrictions on cryptocurrency activities in the country, including trading and mining. While local agencies are monitoring Tether transactions, in August 2023 local law enforcement sentenced a citizen to nine months for buying 94,988 Chinese yuan ($13,067) worth of Tether.
Although China will implement its massive cryptocurrency ban in 2021, cryptocurrencies like Tether have remained popular in China for at least some time. In the year In 2022, Beijing's Chaoyang District People's Court ruled that stablecoins such as USDT cannot be used to pay wages after a company illegally pays an employee using USDT.
According to local reports, China's crypto market was still one of the strongest in the world as of October 2022, as mainland China returned as the second largest Bitcoin mining hub.
Magazine: Holding the First Digital Yuan Wallet, China's $10B Web3 Fund, Starbucks NFTs: Asia Express
