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Key takeaways:
- Chinese authorities are taking steps to crack down on the usage of cryptocurrencies like Tether in foreign currency trading.
- The SPP and the SAFE announced in the statement that it is unlawful to use Tether as a means of exchange for local and foreign currencies.
More than two years after enforcing a significant crypto prohibition, Chinese authorities are taking steps to crack down on the usage of cryptocurrencies like Tether in foreign currency trading.
The people have been cautioned by China’s Supreme People’s Procuratorate (SPP), the top national body in charge of prosecutions in mainland China, not to use USDT as a middleman when exchanging Chinese yuan for other fiat currencies.
On December 27, the State Administration of Foreign Currency (SAFE) and the agency jointly released a statement in which they urged local authorities to take more action against the use of Tether stablecoin in cross-border foreign currency transactions.
The SPP and the SAFE announced in the statement that it is unlawful to use Tether as a means of exchange for local and foreign currencies.
According to the authorities, better cooperation between their local branches is needed to penalize fraudulent foreign currency purchases, unlawful foreign exchange transactions, and other illegal and criminal conduct relating to foreign exchange in compliance with the law.
The Chinese government clarified that trading cryptocurrencies for yuan is prohibited in all circumstances, even unintentional ones like providing exchange services or technical assistance.
The statement referred to a criminal case in which Zhao Dong, a Chinese national and the creator of RenrenBit, an over-the-counter cryptocurrency trading desk, was found to have assisted in the trading of cryptocurrencies and local currencies.
Using United Arab Emirates dirhams to purchase USDT and resale it in mainland China for yuan, the trader was sentenced to seven years in prison and fined 2.3 million yuan ($322,000).
The announcement was made more than two years after authorities in mainland China severely restricted the use of cryptocurrencies in the nation, including mining and trading.
Since then, local authorities have stepped up their Tether transactions crackdown. In August 2023, local enforcement sentenced one citizen to nine months in jail for allegedly acquiring 94,988 Chinese yuan ($13,067) worth of Tether.
Tether and other cryptocurrencies appear to have maintained their popularity in China, at least temporarily, even after China implemented its extensive crypto prohibition in 2021.
Following a company’s illegal salary payment to an employee using USDT, the Chaoyang District People’s Court in Beijing reportedly decided that stablecoins such as USDT cannot be used for wage payments.
As of October 2022, mainland China was once again the second-largest Bitcoin mining hub, and the country’s cryptocurrency market remained among the strongest in the world.
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