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China intensifies crackdown on cryptocurrencies with specific focus on stablecoins

December 29, 2023 China BlockchainCrime & Legal

China is reportedly strengthening its control over cryptocurrencies, with special attention on stablecoins like USDT (Tether), according to the South China Morning Post.

The Supreme People’s Procuratorate (SPP) and State Administration of Foreign Exchange (SAFE) are disseminating information on criminal cases using stablecoins, despite the absence of any official announcements on changes to cryptocurrency law.

Chinese authorities are particularly alarmed by the growing popularity of stablecoins, which are cryptocurrencies linked to reserve assets like the US dollar or gold. Regulators stress that a common means of converting the Chinese Yuan (CNY) into other currencies is the use of digital currencies backed by cash. The goal of enhanced cooperation between the authorities is to combat illegal foreign currency fraud.

The research presents eight “typical cases of illegal foreign exchange crime,” two of which include USDT. In one instance from 2019, a cryptocurrency dealer bought around 22 million UAE dirhams ($6 million) in cash from a Chinese gambling group in Dubai.

After exchanging equivalent CNY in China, the trader profited by reselling USDT and made a profit of over 2%. Another instance is the exchange of almost CNY220 million ($31 million) in foreign exchange using USDT between 2018 and 2021.

Even though mining and trading cryptocurrencies are officially prohibited in China, the industry nonetheless grows via unofficial means. Cryptocurrency is used by underworld merchants to exchange fiat currencies. Beijing is said to have cracked down on more than 1,100 cases of fraudulent, evasive, and illegal foreign exchange trading since 2021, fining a total of CNY1.5 billion (about $211 million).

This suggests that despite political obstacles, it is still difficult to maintain a complete ban on cryptocurrency operations in China, since illicit activities like as underground trade persist.

Original story by: Asia Gaming Brief

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