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Crime in China
ChinaPolitics

China calls for tougher crackdown on use of crypto for illegal forex trading

  • Prosecutors and forex regulators told to strengthen supervision, with cases involving Tether stablecoin highlighted
  • Coordination to be improved to ‘effectively prevent and resolve financial risks and maintain national financial security’

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China’s prosecutor’s office and forex regulator highlighted cases where the Tether stablecoin was used as an intermediary to trade yuan with other currencies. Photo: Shutterstock
Hayley Wong
Chinese authorities have called for a tougher crackdown on the use of cryptocurrencies as a tool for illegal foreign exchange trading in the latest effort to fend off financial risks.
Prosecutors and forex regulators were told to strengthen supervision over foreign exchange, and cases where the Tether stablecoin was used as an intermediary to trade yuan with other currencies were highlighted, the Supreme People’s Procuratorate and State Administration of Foreign Exchange said in a statement on Wednesday.

Tether – which is also known as USDT – is pegged to the US dollar, making the virtual currency less volatile than others.

The SPP and SAFE said their local branches should improve coordination to “punish fraudulent foreign exchange purchases, illegal foreign exchange transactions and other foreign exchange-related illegal and criminal activities lawfully and handle every case efficiently to effectively prevent and resolve financial risks and maintain national financial security”.

The statement said converting yuan to cryptocurrency – and thereby converting it to foreign currencies – or the other way round was illegal in China. Those not directly involved in such transactions but who knowingly provide technical support, including building and maintaining a website, would be seen as “accomplices”.

A “heavy-handed crackdown” on illegal cross-border financial activities would continue, the forex regulator said.

The prosecutor’s office highlighted eight “typical cases of illegal foreign exchange crime” – two of which used the Tether stablecoin as an intermediary – and called for tighter regulation.

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