- China’s Supreme People’s Procuratorate, in collaboration with the State Administration of Foreign Exchange (SAFE), declared the use of Tether (USDT) for converting yuan into foreign currency as illegal, urging local authorities to crack down on related illicit activities.
- Penalties have been enforced on individuals involved in USDT transactions, including a seven-year prison sentence and a $322,000 fine for RenrenBit founder Zhao Dong, alongside another citizen receiving a nine-month sentence for purchasing $13,067 worth of USDT.
- Despite a comprehensive ban on cryptocurrencies over two years ago and restrictions on crypto-related activities such as trading and mining, stablecoins like USDT remained in use in China. The country continues to play a role in the crypto market and is advancing in the adoption of its CBDC for daily transactions.
In a bold move that’s shaking up the cryptocurrency scene, China’s top legal watchdog is clamping down on the use of Tether. If you’re dabbling in USDT, it’s time to pay attention—China means business, and they’re not playing around with their currency rules.
China’s Crackdown on Tether Usage
- Chinese authorities have declared exchanging local currency for foreign ones using Tether (USDT) is not allowed.
- A joint statement from the Supreme People’s Procuratorate and SAFE highlights a crackdown on USDT for foreign currency conversion.
- Illegal activities listed include fraudulent foreign exchange transactions and other related financial misconduct.
- Technical support or providing exchange services for such transactions is also considered unlawful.
Source: Business Telegraph
Consequences for Tether Transactions in China
- Zhao Dong, a crypto trading desk founder, was fined and imprisoned for trading USDT against Chinese yuan.
- A nine-month prison sentence was given to another individual for a Tether transaction worth $13,067.
The Persistence of Crypto in China
- Despite a sweeping ban on cryptocurrencies, including trading and mining, stablecoins like Tether have remained in use.
- China has seen a reduction in crypto market size but continues to engage in digital currency transactions.
- The Chaoyang District People’s Court decreed stablecoins cannot be utilized for salary payments.
China’s Progress in Central Bank Digital Currency
- China is at the forefront of developing Central Bank Digital Currencies (CBDCs).
- Many districts within the country are already using a digital currency for everyday expenses.
The message is clear: China isn’t easing up on its stance against cryptocurrencies. For those in or watching the Chinese market, this could signal the need for a strategic pivot. Understanding the full scope of China’s legal framework on digital assets has never been more crucial.
