China's Cryptocurrency Ban: Tether USDT cannot be used for salary disbursements
According to China’s sweeping ban on all cryptocurrency transactions, including salary disbursements, the stablecoin Tether USDT cannot be used, a Chinese court clarified.
Despite the Chinese government banning all kinds of cryptocurrency transactions last year, firms appear to still use stablecoins like Tether (USDT) to pay their employees.
The Beijing Chaoyang District People's Court ruled that stablecoins such as USDT cannot be used for salary payments, Beijing Daily reported on July 6.
The Chinese court ruled that virtual currencies like USDT cannot be used as a currency in the market, so employers are required to pay their workers using the official currency, renminbi (RMB).
A court case involving a staff member at a local blockchain firm suing his employer for not agreeing to pay his wages in RMB was the reason why the judge ruled that, if an employee's salary is paid in USDT, it must be converted into RMB.
The court pointed out that China's blanket ban on crypto, enforced in September 2021, does not mean that digital currencies like USDT are as legal as legal tender. The court noted the plaintiff's request to pay wages and bonuses in the form of RMB fully complies with local laws and supports it.
The court ordered the defendants to pay a total of more than 270,000 RMB ($40,000) in wages, performance bonuses and annual bonuses owed to the plaintiff.
Cointelegraph reported in September 2021 that the People's Bank of China had officially announced a set of measures to fight against crypto adoption in China. The action involved 10 Chinese state authorities establishing a new mechanism to prevent financial players from participating in any cryptocurrency transactions.
Despite the ban, some local blockchain executives are optimistic about stablecoins like USDT. Yifan He, CEO of Red Date Technology — a tech company involved in China's major blockchain project called the Blockchain Service Network (BSN) — told Cointelegraph last month that stablecoins will be fine if properly regulated.
“USDC and USDT are payment-related currencies, not speculative assets. Once they are fully regulated, they will be fine," he said.
Tether USDT is a major stablecoin that's backed by the U.S. dollar, has a 1:1 ratio with it, and is supported by cash deposits and other assets held in U.S. treasury reserves &
At the time of writing, USDT's daily trading volumes are $57 billion, which is 247% more than the entire daily trading volume of Bitcoin. This makes USDT the third-largest cryptocurrency after Bitcoin (BTC) and Ether (ETH), in terms of market capitalization.