Despite the Chinese government banning all kinds of cryptocurrency transactions last year, apparently some companies still use stablecoins like Tether (USDT) to pay their employees.
The Beijing Chaoyang District People’s Court has ruled that stablecoins such as USDT cannot be used for salary payments, local news agency Beijing Daily reported on July 6.
The Chinese court declared that virtual currencies such as USDT cannot circulate in the market as currency, forcing all employers to pay their workers only with the official currency, the Renminbi (RMB).
The ruling came as part of a court case in which a staff member of a local blockchain company sued his employer for not agreeing to pay his salary in RMB. The plaintiff argued that instead of paying him in RMB, the company had paid his salary and bonuses in the USDT stablecoin.
Citing the blanket ban on cryptocurrencies imposed by China in September 2021, the court noted that digital currencies such as USDT do not have the same legal status as legal tender. The court noted that the plaintiff’s request to pay wages and bonuses in the form of RMB fully complies with local laws and is supported by the court.
Thus, the court ordered the defendants to pay a total of more than 270,000 RMB ($40,000) in salaries, performance bonuses and annual bonuses owed to the plaintiff.
As Cointelegraph previously reported, The People’s Bank of China officially announced a set of measures to fight against the adoption of cryptocurrencies in China in September 2021. The action involved 10 Chinese state authorities establishing a new mechanism to prevent financial actors from participating in any cryptocurrency transactions. .
Despite the ban, some local blockchain executives are positive about stablecoins like USDT. Yifan He, CEO of Red Date Technology—a tech company involved in China’s leading blockchain project called the Blockchain Service Network (BSN)—told Cointelegraph last month that stablecoins should be fine only if they are properly regulated.
“USDC or USDT are payment-related currencies, they are not speculative assets. Once they are fully regulated, they will be fine,” he said.
Regarding the latest news from China, He noted that all USDT transactions are illegal in China. Nevertheless, Banning these transactions may be too difficult for regulators, the executive suggested. “There is no way to technically ban USDT payments in any country”He said. The expert also believes that USDT and its main rival USD Coin (USDC) are “not popular at all in China.”
Tether USDT is a major stablecoin pegged to the US dollar at a 1:1 ratio, backed by US dollars held in US treasury reserves, cash deposits, and other assets.
USDT is the third largest cryptocurrency after Bitcoin (BTC) and Ether (ETH) in terms of market capitalization and is the largest digital asset in terms of daily trading volumes. At the time of writing this article, USDT daily trading volumes amount to $57 billion, which is 247% more than all Bitcoin daily trading volumes.
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