Why China Doesn't Support Tether (USDT)
Tether (USDT) is one of the most famous and widely used stablecoins, tied to the value of the US dollar. It has become the main tool for trading cryptocurrencies, transferring funds and hedging risks in the cryptocurrency world. However, China, despite the active development of digital technologies, takes a tough stance towards Tether and other private stablecoins. In this article, we will understand why China does not support Tether (USDT), what is behind its decision and how this affects the cryptocurrency market in the country.
1. What is Tether (USDT)?
Tether (USDT) is a stablecoin that is tied to the value of the US dollar in order to ensure the stability of its price. It is used in cryptocurrency markets to trade and transfer funds, as well as to preserve value during periods of volatility characteristic of most cryptocurrencies.
USDT is one of the most liquid cryptocurrency assets and is often used by traders to exchange for other cryptocurrencies such as bitcoin or ethereum. It is used on many international cryptocurrency exchanges and platforms.
2. Why isn't China backing Tether?
2.1 Threat to financial stability
One key reason why China does not support Tether (USDT) is Chinese authorities' concerns about financial stability. Stablecoins, like the USDT, are private cryptocurrencies that are not government-controlled, raising concerns among authorities, especially in the context of monetary policy.
China, seeking to maintain full control over its financial system, cannot afford the widespread adoption of stablecoins such as Tether as it reduces the role of the state currency and weakens monetary control. Unlike cryptocurrencies, which are decentralized and lack a regulatory authority, stablecoins tied to fiat currencies can threaten the stability of the money supply and drive it out of the control of the central bank.
2.2 Potential Risks to Currency Sovereignty
Stablecoins such as Tether provide access to foreign currencies (in this case, the US dollar) through cryptocurrency systems, which poses risks to China's economic sovereignty. If citizens and companies in China use USDT and other stablecoins for operations, it could reduce the use of the national currency - the yuan - and therefore affect the state's control over cash flows.
Thus, if stablecoins are used en masse, it could undermine confidence in the national currency and lead to its weakening in international settlements. China, in order to maintain economic independence and strengthen the role of the digital yuan (e-CNY), is forced to restrict or completely prohibit the use of private stablecoins such as Tether.
2.3 Risks of Financial Crime and Money Laundering
Stablecoins such as Tether are often used to circumvent currency controls, money laundering and other illegal financial transactions. For China, where there is tight control over capital and foreign exchange transfers, that is a significant risk. The use of stablecoins makes it possible to move large amounts of money without the participation of traditional financial institutions and without proper control.
China is actively fighting such practices, and the lack of control over stablecoins leads to increased suspicion on the part of the government, further limiting their use.
2.4 Impossibility of monitoring and regulation
Tether and other private stablecoins are run by companies rather than government agencies, making it impossible for China to fully monitor and regulate their use. This runs counter to China's policy of creating centralized and controlled digital currencies such as the digital yuan (e-CNY), which would be fully controlled by the Central Bank of China.
Contrasting the digital yuan with private stablecoins not subject to government regulation poses challenges to maintaining financial security and economic stability.
3. How do Chinese authorities regulate cryptocurrencies and stablecoins?
China has taken a number of steps in recent years to curb the use of cryptocurrencies and stablecoins. In particular, cryptocurrency exchangers were closed, restrictions on cryptocurrency transactions were introduced, and cryptocurrency mining was even banned. China has also banned platforms that provide stablecoin exchange services such as Tether.
Despite these restrictions, however, China is actively working to develop its digital yuan (e-CNY), which is the official digital currency controlled by the Central Bank of China. This allows the state to manage economic flows, avoiding the influence of private stablecoins and ensuring full control over the financial system.
4. The future of stablecoins in China
Despite China's tough stance on stablecoins, it cannot be ruled out that in the future the cryptocurrency market in the country will adapt to new realities. The possible development of an international trading system using stablecoins or the legalization of stablecoins under strict government control could be a solution for China.
Yet for now, China continues to develop the digital yuan as a major alternative to private stablecoins, bolstering the national currency and ensuring economic stability.
Conclusion
China has a strict stance on Tether (USDT) and other stablecoins as they pose a threat to financial stability, currency sovereignty and cash flow control. In response, China is actively promoting its own digital currency, the digital yuan (e-CNY), which allows the state to maintain control over the economy and strengthen the yuan's influence in international settlements.
Tether (USDT) is one of the most famous and widely used stablecoins, tied to the value of the US dollar. It has become the main tool for trading cryptocurrencies, transferring funds and hedging risks in the cryptocurrency world. However, China, despite the active development of digital technologies, takes a tough stance towards Tether and other private stablecoins. In this article, we will understand why China does not support Tether (USDT), what is behind its decision and how this affects the cryptocurrency market in the country.
1. What is Tether (USDT)?
Tether (USDT) is a stablecoin that is tied to the value of the US dollar in order to ensure the stability of its price. It is used in cryptocurrency markets to trade and transfer funds, as well as to preserve value during periods of volatility characteristic of most cryptocurrencies.
USDT is one of the most liquid cryptocurrency assets and is often used by traders to exchange for other cryptocurrencies such as bitcoin or ethereum. It is used on many international cryptocurrency exchanges and platforms.
2. Why isn't China backing Tether?
2.1 Threat to financial stability
One key reason why China does not support Tether (USDT) is Chinese authorities' concerns about financial stability. Stablecoins, like the USDT, are private cryptocurrencies that are not government-controlled, raising concerns among authorities, especially in the context of monetary policy.
China, seeking to maintain full control over its financial system, cannot afford the widespread adoption of stablecoins such as Tether as it reduces the role of the state currency and weakens monetary control. Unlike cryptocurrencies, which are decentralized and lack a regulatory authority, stablecoins tied to fiat currencies can threaten the stability of the money supply and drive it out of the control of the central bank.
2.2 Potential Risks to Currency Sovereignty
Stablecoins such as Tether provide access to foreign currencies (in this case, the US dollar) through cryptocurrency systems, which poses risks to China's economic sovereignty. If citizens and companies in China use USDT and other stablecoins for operations, it could reduce the use of the national currency - the yuan - and therefore affect the state's control over cash flows.
Thus, if stablecoins are used en masse, it could undermine confidence in the national currency and lead to its weakening in international settlements. China, in order to maintain economic independence and strengthen the role of the digital yuan (e-CNY), is forced to restrict or completely prohibit the use of private stablecoins such as Tether.
2.3 Risks of Financial Crime and Money Laundering
Stablecoins such as Tether are often used to circumvent currency controls, money laundering and other illegal financial transactions. For China, where there is tight control over capital and foreign exchange transfers, that is a significant risk. The use of stablecoins makes it possible to move large amounts of money without the participation of traditional financial institutions and without proper control.
China is actively fighting such practices, and the lack of control over stablecoins leads to increased suspicion on the part of the government, further limiting their use.
2.4 Impossibility of monitoring and regulation
Tether and other private stablecoins are run by companies rather than government agencies, making it impossible for China to fully monitor and regulate their use. This runs counter to China's policy of creating centralized and controlled digital currencies such as the digital yuan (e-CNY), which would be fully controlled by the Central Bank of China.
Contrasting the digital yuan with private stablecoins not subject to government regulation poses challenges to maintaining financial security and economic stability.
3. How do Chinese authorities regulate cryptocurrencies and stablecoins?
China has taken a number of steps in recent years to curb the use of cryptocurrencies and stablecoins. In particular, cryptocurrency exchangers were closed, restrictions on cryptocurrency transactions were introduced, and cryptocurrency mining was even banned. China has also banned platforms that provide stablecoin exchange services such as Tether.
Despite these restrictions, however, China is actively working to develop its digital yuan (e-CNY), which is the official digital currency controlled by the Central Bank of China. This allows the state to manage economic flows, avoiding the influence of private stablecoins and ensuring full control over the financial system.
4. The future of stablecoins in China
Despite China's tough stance on stablecoins, it cannot be ruled out that in the future the cryptocurrency market in the country will adapt to new realities. The possible development of an international trading system using stablecoins or the legalization of stablecoins under strict government control could be a solution for China.
Yet for now, China continues to develop the digital yuan as a major alternative to private stablecoins, bolstering the national currency and ensuring economic stability.
Conclusion
China has a strict stance on Tether (USDT) and other stablecoins as they pose a threat to financial stability, currency sovereignty and cash flow control. In response, China is actively promoting its own digital currency, the digital yuan (e-CNY), which allows the state to maintain control over the economy and strengthen the yuan's influence in international settlements.