China Cracks Down on Illegal Forex Trading with Crypto
The Chinese government is taking strict measures to crackdown on the use of cryptocurrencies in illegal foreign exchange trading. The Supreme People’s Procuratorate and State Administration of Foreign Exchange have instructed prosecutors and forex regulators to closely monitor foreign exchange activities. The focus is particularly on cases where Tether (USDT) is used as an intermediary for trading yuan with other currencies.
Regulating Crypto Forex Trading
In order to prevent and resolve financial risks while maintaining national financial security, Chinese authorities have called for a tougher crackdown on the use of crypto in illegal forex trading. Local branches have been directed to punish fraudulent foreign exchange purchases, illegal transactions, and other related illegal activities. The conversion of yuan to cryptocurrency and vice versa has been deemed illegal, and individuals providing technical support for such activities will also be considered accomplices.
Illegal Forex Trading Cases Involving Crypto
The prosecutor’s office has highlighted eight typical cases of illegal foreign exchange crimes, two of which involved the use of Tether stablecoin. In one case, a crypto trader received millions in cash from a Chinese gambling network in Dubai, which he converted into Tether stablecoin and resold in mainland China for yuan. He was sentenced to seven years in jail and fined heavily upon conviction.
In another case, over 220 million yuan worth of foreign currency was converted using Tether from 2018 to 2021. The developer and maintainer of several Chinese payment websites linked to these transactions received a five-year prison sentence and a fine.
Despite strict rules against foreign currency trading and the official ban on crypto trading and mining in mainland China, there has been a rapid increase in illicit foreign trades involving cryptocurrencies.
Hot Take: China Takes Aim at Tether Amid Crackdown on Illegal Forex Trading
China’s crackdown on the use of cryptocurrencies in illegal forex trading, particularly cases involving Tether, demonstrates the government’s commitment to maintaining financial security and preventing financial risks. By regulating crypto forex trading and punishing those involved in illegal activities, China aims to protect its national financial system. However, the increasing number of illicit foreign trades using crypto highlights the challenges faced by authorities in enforcing these regulations. As China continues its efforts to combat illegal forex trading, the impact on the crypto market, especially Tether, remains to be seen.
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