Breaking: China Court Rules Restrictions On USDT, Here’s Why

Varinder Singh
July 6, 2022
Why Trust CoinGape
CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Tether Investment Division Facilitates Crude Oil Trade in Middle East: Details

China’s Chaoyang Court on Wednesday in a labor dispute lawsuit ruled that companies can’t pay wages in Tether (USDT). Moreover, the court stated that virtual currency should not be circulated in the market as a currency. Thus, the enterprise must pay the arrears of wages and bonuses in Renminbi (RMB).

Advertisement
Advertisement

Chinese Court Ruled to Restrict USDT for Wages

Some companies involved in blockchain and digital assets business in China are using USDT or other cryptos to pay employees. In a lawsuit filed in the Chaoyang Court, a plaintiff named Shen claimed that the defendant, a network technology company, has paid wages in USDT, reported Beijing Daily. Shen is the vice president of products of a network technology company.

The court ruled that the “Labor Law” clearly specifies that wages should be paid to an employee in the form of currency. Moreover, Tether (USDT) is not a currency, but a virtual currency does not have the legal status of legal tender.

According to The Law of the People’s Republic of China on the People’s Bank of China, the legal tender of the People’s Republic of China is the “Renminbi.” It makes paying wages in USDT as illegal. The court cited the “Notice on Further Preventing and Disposing of Hype Risks in Virtual Currency Transactions” issued by the central bank, the Supreme People’s Court, the Central Cyberspace Administration of China, and other ten major departments in September 2021.

In fact, the Chinese government has a negative stance regarding cryptocurrency. The Chinese government’s crackdown against crypto mining and trading last year diminished the enormous influence of China in the crypto market.

Tether (USDT) should not be circulated in the market. The court supports Shen’s request to pay wages and bonuses in the form of RMB.

Advertisement
Advertisement

Tether’s USDT Relation to China

Tether’s stablecoin has been under continuous attack since its depeg after the Terra-LUNA collapse. Then after the Celsius, Three Arrows, and Voyager’s insolvency.

Massive amounts of USDT redemptions were performed by investors and hedge funds as many think USDT reserves have exposure to Chinese real estate firm Evergrande and Chinese commercial papers. However, Tether’s CTO Paolo Ardoino has neglected those claims.

Today, Paolo Ardoino said in a tweet that Tether is able to provide liquidity to customers asking for USDT redemptions.

“While if in the same timeframe, the net balance is negative by -15B, it means that the stablecoin was able to give back the money to customers asking for redemptions without using other customers’ money and can realistically claim that it has great liquidity and is safe.”

Advertisement
coingape google news coingape google news
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Varinder has over 10 years of experience and is known as a seasoned leader for his involvement in the fintech sector. With over 5 years dedicated to blockchain, crypto, and Web3 developments, he has experienced two Bitcoin halving events making him key opinion leader in the space. At CoinGape Media, Varinder leads the editorial decisions, spearheading the news team to cover latest updates, markets trends and developments within the crypto industry. The company was recognized as Best Crypto Media Company 2024 for high impact and quality reporting. Being a Master of Technology degree holder, analytics thinker, technology enthusiast, Varinder has shared his knowledge of disruptive technologies in over 5000+ news, articles, and papers.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.