A recent report by the South China Morning Post suggests that China is gearing up for an intensified crackdown on cryptocurrencies, with the Supreme People’s Procuratorate (SPP) and State Administration of Foreign Exchange (SAFE) shedding light on criminal cases associated with the USDT stablecoin.
Although no specific changes to cryptocurrency regulations have been announced, Chinese authorities are addressing the surge in popularity of stablecoins – cryptocurrencies pegged to reserve assets like the US dollar or gold.
Regulators emphasize that digital currencies backed by fiat have become a prevalent medium for CNY trading against other currencies. This trend has prompted local officials to enhance coordination to lawfully tackle fraudulent foreign exchange activities. The prosecutor’s office highlighted eight “typical cases of illegal foreign exchange crime,” with two specifically involving USDT.
In one instance dating back to 2019, a crypto trader received over 22 million UAE dirhams ($6 million) in cash from a Chinese gambling syndicate in Dubai. The trader then converted the equivalent CNY in China and lucratively resold USDT, yielding a profit of over 2 percent. Another case detailed the exchange of more than CNY220 million ($31 million) worth of foreign currency using USDT between 2018 and 2021.
Despite the official ban on crypto trading and mining in China, the industry continues to thrive, with underground traders employing cryptocurrencies for fiat currency exchanges. Beijing has reportedly cracked down on over 1,100 cases related to illegal foreign exchange trading, evasion, and fraud, imposing fines totalling CNY1.5 billion (approximately $211 million) since 2021.
