China Calls for Strict Measures Against Illegal USDT Trading
In an effort to further crack down on crypto, China is urging for stringent actions against illegal foreign exchange trading that involves the USDT stablecoin. The Supreme Peopleβs Procuratorate (SPP) and State Administration of Foreign Exchange (SAFE) have recently highlighted criminal cases related to USDT, signaling China’s intention to strengthen its crypto crackdown.
While there haven’t been any specific changes to cryptocurrency regulations, Chinese regulators are concerned about the growing popularity of stablecoins, which are linked to reserve assets like the U.S. dollar or gold. They note that fiat-backed digital currencies have become a common intermediary for yuan trading with other currencies, leading local authorities to enhance coordination in order to address fraudulent foreign exchange activities lawfully.
Focus on Illegal Foreign Exchange Crimes
The prosecutor’s office specifically emphasized eight “typical cases of illegal foreign exchange crime,” two of which involved USDT. In one instance from 2019, a crypto trader received more than 22 million UAE dirhams in cash from a Chinese gambling syndicate in Dubai. The trader converted the corresponding yuan in China and then resold USDT, making a profit of over 2%. Another case involved the exchange of more than 220 million yuan worth of foreign currency using USDT between 2018 and 2021.
Despite the official ban on crypto trading and mining in China, the industry remains popular in the region as underground traders continue to use cryptocurrencies for fiat currency exchanges. According to the South China Morning Post, Beijing has handled over 1,100 cases related to illegal foreign exchange trading, evasion, and fraud since 2021, resulting in fines totaling 1.5 billion yuan (approximately $211 million). However, it is unclear how many of these cases involve cryptocurrencies.
Hot Take: China Strengthens Crackdown on USDT Trading
China’s recent emphasis on illegal foreign exchange trading involving USDT demonstrates its commitment to intensifying the crypto crackdown. By highlighting specific cases and urging for strict measures, Chinese regulators aim to combat fraudulent activities and maintain control over the digital currency landscape. While the ban on crypto trading and mining remains in place, the popularity of cryptocurrencies persists underground, posing challenges for authorities. As China continues to address illegal foreign exchange crimes, it remains to be seen how this crackdown will impact the broader cryptocurrency market in the country.
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