China Urges Clampdown on Tether Stablecoin Cites Facilitating Illicit Forex Trading
According to China’s Supreme People’s Procuratorate, it is illegal to utilize Tether as an exchange medium between local and foreign currency.
More than two years following the implementation of a major crypto ban, Chinese authorities are seeking to crack down on the utilization of cryptocurrencies such as Tether in foreign exchange trading.
China Cautions Nationals Against USDT Usage in Yuan-Foreign Currency Trade
China’s Supreme People’s Procuratorate (SPP) has cautioned people against utilizing USDT as a mediator to trade the Chinese yuan with other fiat currencies. SPP is currently the highest agency tasked with legal prosecution in China.
On December 27, SPP gave a joint announcement with the State Administration of Foreign Exchange (SAFE). Local officials were instructed to execute more stringent interventions against the utilization of Tether stablecoin in cross-border foreign exchange transactions.
According to the statement, the two agencies claimed that it is illegal to utilize Tether as an exchange medium between foreign and local currencies. Further, they noted that local branches must enhance coordination to ‘penalize deceitful purchase of foreign exchange and illicit transactions involving foreign exchanges.’
Besides, they should also punish ‘other foreign exchange-associated illicit and criminal deeds’ in line with the law.
Chinese Authorities Heighten Action Against Prohibited Crypto Exchange Activities
The nation’s authorities stressed that all cryptocurrency exchange-associated activities against the yuan are prohibited. This includes the provision of exchange services and indirect involvement, for instance, technical support.
The statement highlighted a criminal case concerning Zhao Dong, who played a role in facilitating local and cryptocurrency trading. Zhao is a Chinese citizen and founder of RenrenBit, an over-the-counter crypto trading desk. The trader was fined 2.3M yuan ($322000) and got a 7-year imprisonment for utilizing UAE dirhams to purchase USDT and reselling it in mainland China for yuan.
This news comes more than two years after mainland China authorities implemented a significant ban on cryptocurrency undertakings in the nation, which includes mining and trading.
Chinese Local Authorities Repress USDT-based Transactions
Since then, local agencies have been repressing Tether transactions. For instance, in August, a citizen got a nine-month sentence for buying Tether worth 94988 yuan ($13067).
In spite of China implementing its extensive crypto ban three years ago, cryptocurrencies such as Tether maintained their popularity in the nation.
Last year, it classified stablecoins such as USDT among the prohibited means to remunerate. This happened after a company unlawfully paid a worker using USDT.
Local reports show that as of October last year, the nation’s crypto market was still one of the most robust globally. Mainland China was the second major Bitcoin mining hub.
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