Chinese authorities have initiated stringent measures against the usage of cryptocurrencies like Tether, marking a significant move more than two years after the implementation of a comprehensive ban on major cryptocurrency activities, including Forex trading.
The Supreme People’s Procuratorate (SPP), the foremost state agency overseeing legal prosecutions in mainland China, and the State Administration of Foreign Exchange (SAFE) jointly cautioned the public against employing USDT as an intermediary for transactions between the yuan and other fiat currencies.
In a collective statement issued on December 27, both agencies urged local authorities to enforce stricter regulations on the utilization of Tether stablecoins in cross-border foreign exchange dealings. The declaration emphasized the illegality of using Tether for facilitating exchanges between domestic and foreign currencies. It further directed local branches to enhance coordination to combat fraudulent foreign exchange purchases, illegal transactions, and other related unlawful activities in accordance with the law.
Chinese authorities have made it clear that any engagements involving the exchange of yuan and cryptocurrencies, including indirect involvement like technical support or provision of exchange services, are unlawful.
The statement referred to a criminal case involving Zhao Dong, a Chinese national and the founder of RenrenBit, an over-the-counter cryptocurrency trading platform. Zhao Dong was sentenced to seven years in prison and fined 2.3 million yuan ($322,000) for purchasing USDT using UAE dirhams and subsequently reselling them for yuan within mainland China. This development comes in the wake of China's ban on cryptocurrency activities in 2021, where the authorities have been rigorously cracking down on Tether trading. In a recent case, a citizen received a nine-month prison sentence for acquiring 94,988 yuan ($13,067) worth of Tether in August 2023.
Despite the strict cryptocurrency ban imposed in 2021, cryptocurrencies like Tether continue to maintain popularity in China. In a ruling in 2022, the Beijing Chaoyang District People's Court prohibited the use of stablecoins like USDT for salary payments after a company was found using USDT for employee remuneration.
China's cryptocurrency market still stands robust, and as of October 2022, mainland China has re-emerged as the world's second-largest Bitcoin mining hub, as reported by local sources.
