Li Jing
In a bid to intensify the crackdown on crypto, China is calling for strict measures against illegal foreign exchange trading involving USDT.
China is seemingly preparing to double down on its crypto crackdown, with the Supreme People’s Procuratorate (SPP) and State Administration of Foreign Exchange (SAFE) highlighting criminal cases involving the USDT stablecoin in a recent statement, according to a South China Morning Post report.
While specific changes to cryptocurrency regulations in China haven’t been announced, Chinese regulators have addressed the rising popularity of stablecoins, which are cryptocurrencies pegged to reserve assets like the U.S. dollar or gold. Authorities have observed that these digital currencies, backed by fiat currencies, are increasingly being used as intermediaries for trading yuan with other currencies. This trend has prompted local officials to enhance coordination to legally tackle fraudulent foreign exchange activities.
The prosecutor’s office has particularly highlighted eight “typical cases of illegal foreign exchange crime,” with two of them involving Tether (USDT), a prominent stablecoin. In one case from 2019, a crypto trader received over 22 million UAE dirhams in cash from a Chinese gambling syndicate in Dubai, converted the equivalent amount into yuan in China, and then profited by reselling USDT at a margin of over 2%, as per the report. 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 cryptocurrency trading and mining in China, the industry remains popular in the region, with underground traders using cryptocurrencies to exchange for fiat currencies, according to the South China Morning Post.
According to the Chinese news agency Xinhua, Beijing has cracked down on 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 to what extent these cases involve cryptocurrencies.