According to its website, Tether (USDT) is a U.S. dollar-pegged cryptocurrency stablecoin that is “100% backed by Tether’s reserves.” Some of the companies use USDT as payment. So what is USDT payment and why is it illegal pay a salary with USDT in China? If you do not know yet, let’s read the article to find out.
What is USDT payment?
Tether (USDT) is known as one of the stablecoins. Each USDT coin is pegged and represented by 1 USD, so the USDT exchange rate is stable and is always worth about 1 USD. Tether is issued by Tether Limited, a company owned by Bitfinex, and more than 2/3 of the token supply is backed by cash or commercial paper. As a stablecoin, it does not suffer from sudden price fluctuations. When you transfer USDT to someone, you can always be sure that its value will not change. Nonetheless, USDT, unlike USD, is not a currency or legal tender. Tether is primarily based on the Ethereum blockchain. As a regular ERC20* token, it can be sent to any Ethereum address.
Why should you use USDT payment?
Using USDT as a payment method eliminates the hassle of long processing times and stuttering funds. This also benefits businesses that frequently transact with international clients and partners, as the USDT payment option not only speeds up payments but also leaves room for additional savings.
Why is it illegal to pay a salary with USDT in China?
The decision to exclude stablecoins stems from a court case involving a worker at a local blockchain company suing his employer for not agreeing to pay wages in yuan.
The staff member identified as Shen sued his former employer after the company disbanded, saying his salaries were not paid after completing the project. According to the plaintiff, his employer did not receive his salary in RMB, but liquidated half of his salary and bonuses in USDT stablecoins.
However, the court cited China’s blanket ban on cryptocurrencies last September and declared that virtual currencies such as USDT do not have the same legal status as fiat currencies. The Chinese court upheld the plaintiff's request to pay its wages and bonuses in RMB. Apparently, his appeal was in full compliance with local law, and the court upheld him. The hearing sided with the plaintiff and ordered the defendant to pay the plaintiff's wages, performance bonuses, and annual bonuses totaling more than 270,000 yuan ($40,000) owed to the plaintiff.
Is Tether USDT safe?
Tether offers stablecoins in USD, MXN, CNY, and EUR. All of its tokens are pegged 1:1 to their matching fiat currency and are 100% backed by Tether’s reserves. USDT is the largest U.S. dollar stablecoin by market capitalization.
You can exchange your Tether cryptocurrency for real money at any time, and so far it has proven flawless in practice. As the chart below shows, USDT has not had a sustained decoupling since it began trading in 2015.
I hope this article will help you to learn what is USDT payment and why is it illegal to pay salary with USDT in China. Although stablecoins are the largest digital asset in terms of daily trading volume, China is still looking for a digital currency within its borders.
