China is advocating for stringent regulations against illicit foreign exchange trading employing USDT to step up the crackdown on cryptocurrency.
According to a South China Morning Post report, China appears to be ready to crack down on cryptocurrencies. In a recent statement, the Supreme People’s Procuratorate (SPP) and State Administration of Foreign Exchange (SAFE) highlighted criminal cases involving the USDT stablecoin.
The restrictions around cryptocurrencies have not specifically changed. However, Chinese authorities have taken notice of the growing acceptance of stablecoins—digital currencies linked to reserve assets like gold or the US dollar.
Authorities have observed that digital currencies supported by fiat currencies have gained popularity as middlemen for yuan exchange transactions with other currencies.
This development has led local officials to enhance their cooperation to combat fraudulent foreign exchange operations legally. Eight “typical cases of illegal foreign exchange crime” were specifically highlighted by the prosecutor’s office, two of which included USDT.
According to the allegation, a Chinese gambling gang paid a cryptocurrency trader in Dubai over 22 million UAE dirhams in cash. The trader converted the yuan to USDT in China and resold it for a profit of more than 2%.
In a different situation, foreign currency valued at almost 220 million yuan was exchanged using USDT between 2018 and 2021. Despite the official ban on cryptocurrency mining and trading in China, the South China Morning Post reports that the sector is quite popular there because black market participants continue swapping cryptocurrency for fiat money.
The Chinese news agency Xinhua reports that since 2021, Beijing has prosecuted over 1,100 cases involving fraud, evasion, and illicit foreign exchange trading, with fines totaling 1.5 billion yuan (about $211 million). It needs to be clarified, though, how much cryptocurrency is involved in these situations.
