China Declares Currency Exchange via Tether Illegal

• Chinese Authorities Warn Against the Use of Tether for Currency Exchange
• Joint Statement from Chinese Agencies
• China's Yuan Holds 4th Position in Global Currency Usage
• Consequences of using Tether in China
• Tether's Bitcoin Holdings Gains a Profit of $1,100,000,000
• China's Ban on Cryptocurrencies
• China's Progress in the CBDCs (Central Bank Digital Currency) Field

Chinese Authorities Warn Against the Use of Tether for Currency Exchange

The Supreme People's Procuratorate in China has issued a caution against the utilization of the Tether$1.000 -0.12% (USDT) stablecoin for currency exchange. It is declared as illegal by the Chinese authorities to employ USDT in order to exchange the local currency for a foreign one.

Joint Statement from Chinese Agencies

On 27th December, a joint statement was released by the Supreme People's Procuratorate along with the State Administration of Foreign Exchange (SAFE). They are striving for more rigid measures against the utilization of the Tether (USDT). According to the document, it is illegal to use USDT for transferring yuan into a foreign currency. The agencies have also encouraged local branches to take action against illicit foreign exchange purchases, unlawful foreign exchange transactions, and other illegal and criminal activities related to foreign exchange.

China's Yuan Holds 4th Position in Global Currency Usage

As per the reports, indirect involvement such as technical support or exchange services in these activities is also deemed illegal.

Consequences of using Tether in China

A citizen of China named Zhao Dong was detected to be facilitating cryptocurrency and local currency trading. As the founder of a cryptocurrency trading desk, RenrenBit, he was penalized with a fine of $322,000 and seven years of imprisonment. He was convicted for buying Tether (USDT) with United Arab Emirates (UAE) dirhams and reselling it in mainland China for Chinese yuan. Another user was sent to jail for nine months for buying $13,067 worth of Tether (USDT) in August 2023.

Tether's Bitcoin Holdings Gains a Profit of $1,100,000,000

China's Ban on Cryptocurrencies

Cryptocurrencies were put under a blanket ban by China more than two years ago. In addition, the country prohibited crypto-related activities, such as trading and mining. Despite the prohibition, stablecoins including USDT remained in demand in the country. In 2022, a ruling was made by the Chaoyang District People's Court prohibiting the usage of stablecoins for salary payments. However, as of October 2022, China continues to have a robust crypto market, albeit at a smaller scale than before.

China's Progress in the CBDCs (Central Bank Digital Currency) Field

China is rated as one of the top countries in the Central Bank Digital Currency (CBDC) arena. It has made remarkable progress in the adoption of digital currency, with numerous districts using it for common expenditures, like public transportation.

Edited by Jonathan Stoker