Limiting USDT Use In Forex Trading
After implementing a broad crypto prohibition two years ago, China recently reiterated its crackdown on cryptocurrencies, particularly emphasizing Tether (USDT) in foreign currency transactions. The Supreme People’s Procuratorate (SPP), China’s highest legal prosecution office, has warned the general public against using USDT as a conduit for exchanging Chinese yuan with other worldwide fiat currencies.
A joint statement from a coordinated effort by the State People’s Party (SPP) and the State Administration of Foreign Exchange (SAFE) disclosed that additional strict measures will be taken to curb the use of Tether stablecoin in cross-border foreign exchange operations. The directive implies a proactive approach to ensure conformity with established financial regulations, which highlights China’s determination to tighten controls surrounding cryptocurrencies.
No Crypto For Yuan Transaction
The SPP and SAFE emphasized the need to adhere to the law stringently in a joint declaration. They emphasized the need for increased cooperation among local branches to stop unlawful deals in foreign exchange.
This prohibition was extended to include indirect activities such as providing technical assistance or exchange services. The Chinese authorities reaffirmed that any cryptocurrency exchange that involves the yuan is strictly prohibited.
Zhao Dong, a Chinese national and founder of RenrenBit, an over-the-counter crypto trading desk, was the subject of a key case referenced in the statement. A punishment of 2.3 million yuan ($322,000) and a prison sentence of seven years was handed down to Zhao Dong for his role in the trade of crypto assets and fiat currency. To carry out his acts, he first purchased USDT with dirhams from the United Arab Emirates and then resold it within mainland China for Yuan.
Crypto Participants’ Resilience Against Regulation
The sentencing of an individual to nine months in prison owing to the purchase of 94,988 Chinese yuan ($13,067) worth of Tether in August 2023 is an example of how local authorities have strengthened their efforts to curb Tether transactions. Even though China had placed a comprehensive ban on cryptocurrencies in 2021, certain cryptocurrencies, such as Tether, continued to be influential within the country’s borders.
Furthermore, the Chaoyang District People’s Court in Beijing issued a ruling in 2022 that prohibited the use of stablecoins like USDT to disburse salaries. This decision highlighted the ramifications that can arise from using unlawful payment methods within companies.
Despite regulatory crackdowns, China’s cryptocurrency sector has remained robust, attesting to the country’s resilience. Mainland China’s continued dominance in the global cryptocurrency scene came to light in October 2022 when it reclaimed its position as the world’s second-largest Bitcoin mining hub.
Based on these incidents, a complicated relationship exists between China’s regulatory attitude and the continued popularity and usage of USDT.
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