Chinese authorities are intensifying their efforts to curb the use of cryptocurrencies, specifically targeting Tether, in foreign exchange trading, more than two years after imposing a comprehensive ban on cryptocurrencies.
The Supreme People’s Procuratorate (SPP), the highest legal prosecution agency in mainland China, along with the State Administration of Foreign Exchange (SAFE), jointly issued a warning on December 27th, cautioning the public against employing USDT as an intermediary for trading the Chinese yuan against other fiat currencies.
In their joint statement, the SPP and SAFE unequivocally stated that utilizing Tether as an intermediary for exchanging local and foreign currencies is illegal.
They called upon local authorities to enforce stricter measures against the use of the Tether stablecoin in cross-border foreign exchange transactions.
Furthermore, the authorities emphasized that all activities related to cryptocurrency exchange involving the yuan are illegal, including indirect involvement such as providing technical support or exchange services.
This crackdown follows a recent case involving Chinese citizen Zhao Dong, the founder of RenrenBit, an over-the-counter crypto trading desk.
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Zhao Dong was sentenced to seven years in prison and fined 2.3 million yuan ($322,000) for using United Arab Emirates dirhams to purchase USDT and subsequently reselling it in mainland China for yuan.
This latest development comes more than two years after the Chinese authorities initially imposed a sweeping ban on cryptocurrency activities within the country, encompassing trading and mining.
Since then, local agencies have been rigorously pursuing cases related to Tether transactions, with one individual sentenced to nine months in prison for purchasing 94,988 Chinese yuan ($13,067) worth of Tether in August 2023.
Despite the 2021 cryptocurrency ban, it appears that cryptocurrencies like Tether remained popular in China for some time.
In 2022, Beijing’s Chaoyang District People’s Court ruled against the use of stablecoins like USDT for salary payments, penalizing a firm that had illegally compensated an employee using USDT.
Remarkably, as of October 2022, China’s crypto market continued to rank among the world’s most robust, with mainland China reemerging as the second-largest Bitcoin mining hub.
This demonstrates the ongoing tension between regulatory authorities and the cryptocurrency industry within China.
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