- Chinese government continues to crack down on use of cryptocurrencies like Tether for illegal forex trading, two years after major cryptocurrency ban
- Authorities warn against using Tether to exchange Chinese yuan with other fiat currencies, saying any crypto-yuan exchange is illegal
- Despite crypto ban, Tether remains popular in China; authorities determined to enforce ban, prosecuting facilitators of crypto-yuan transactions
The Chinese government is moving to strengthen its crackdown on cryptocurrencies like Tether and Bitcoin being used for illegal forex trading, more than two years after its major crypto ban.
China’s Stance Against Crypto Trading
China’s Supreme People’s Procuratorate (SPP), the highest national agency responsible for legal prosecution in mainland China, has warned the public against using Tether (USDT) as an intermediary to trade Chinese yuan with other fiat currencies.
The SPP issued a joint statement with the State Administration of Foreign Exchange (SAFE) on Dec 27 urging local officials to implement stricter measures against Tether stablecoin use in cross-border foreign exchange transactions. In the statement, the SPP and the SAFE declared that using Tether as a medium of exchange between the local and foreign currencies is illegal.
Authorities Crack Down on Crypto-Forex Activities
The Chinese authorities emphasized that any activity involving cryptocurrency exchange against yuan is illegal, including indirect involvement such as technical support or offering exchange services.
The statement mentioned a criminal case involving Chinese citizen Zhao Dong, the founder of the over-the-counter crypto trading desk RenrenBit, who was found to have facilitated crypto and local currency trading. The trader was jailed for seven years and fined 23 million yuan ($322,000) for using United Arab Emirates dirhams to buy USDT and resell it in mainland China for yuan.
Despite the Crypto Ban, Tether Remains Popular
The news comes more than two years after mainland China authorities placed a major ban on cryptocurrency activities in the country, including trading and mining. Local agencies have been cracking down on Tether transactions since, with local enforcement sentencing one citizen for nine months on charges of purchasing 94,988 Chinese yuan ($13,067) worth of Tether in August 2022.
Despite China enforcing its massive crypto ban in 2021, cryptocurrencies like Tether apparently remained popular in China, at least for a while. In 2022, Beijing’s Chaoyang District People’s Court reportedly ruled that stablecoins like USDT cannot be used for salary payments after one firm illegally paid an employee using USDT.
According to local reports, China’s crypto market was still among the world’s strongest as of October 2022, as mainland China returned as the second top Bitcoin mining hub.
Conclusion
The Chinese government continues to crack down on cryptocurrency trading activities, even stablecoins like Tether, despite its popularity in the country. The authorities are determined to enforce the country’s crypto ban, even prosecuting those who facilitate crypto transactions with the local currency. However, it remains to be seen whether these measures will truly stamp out crypto trading in China.
