China Implements Stricter Measures Against Cryptocurrency Trading, Specifically Tether
Chinese authorities have issued a new directive to crack down on the use of cryptocurrencies, particularly emphasizing their involvement in illegal foreign exchange trading. The Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE) released a joint statement calling for enhanced supervision and coordination to mitigate financial risks.
The statement specifically highlights concerns regarding the use of Tether (USDT) as an intermediary in trading yuan with other currencies. It emphasizes that converting yuan to cryptocurrency and vice versa is illegal in China, including using cryptocurrencies as a medium for currency conversion.
The authorities also warn that individuals providing technical support for these transactions are considered “accomplices” in the eyes of the law.
Illegal Yuan-Crypto Conversions and Tether’s Role in Two Cases
The SPP cited eight cases of illegal foreign exchange crimes, two of which involved Tether as an intermediary. The statement calls for stricter regulation in light of these cases.
One case from 2019 involved a crypto trader who received cash from a Chinese gambling syndicate in Dubai and converted it into yuan using Tether stablecoin. Another case involved Zhao Dong, the founder of RenrenBit, who used United Arab Emirates dirhams to buy USDT and resell it in mainland China for yuan.
China Warns Against Illegal Use of Tether and Other Stablecoins
China’s warning against the use of stablecoins like Tether for cross-border transactions comes more than two years after the country implemented a ban on cryptocurrency activities. Despite the ban, cryptocurrencies like Tether remain popular in China.
The warning reflects ongoing scrutiny of cryptocurrency transactions, particularly those involving stablecoins, in the Chinese market. China has consistently enforced strict regulations to maintain control over the financial system and prevent illegal activities.
China’s Cryptocurrency Market Despite Regulatory Efforts
Despite the intensified regulatory efforts, China remains a significant market for cryptocurrencies, boasting the largest transaction turnover in East Asia. Underground traders often use cryptocurrencies to bypass regulations and engage in cross-border transactions.
This week, law enforcement in Qingdao disclosed a major money laundering case involving illegal forex trading with cryptocurrencies, further emphasizing the crackdown on illicit cross-border financial transactions involving digital assets.
Hot Take: China Tightens Control on Cryptocurrency Trading
Chinese authorities are taking stronger measures to regulate cryptocurrency trading, specifically targeting the use of Tether stablecoin in foreign exchange transactions. The recent joint statement from the SPP and SAFE highlights the illegality of converting yuan to cryptocurrency and vice versa, as well as providing technical support for such transactions.
China’s warning against the use of stablecoins like Tether indicates continued scrutiny of cryptocurrency activities in the country. Despite regulatory efforts, China remains a significant market for cryptocurrencies, but authorities are determined to crack down on illegal cross-border transactions involving digital assets.
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