Thursday, September 29, 2022

China Court Rules Against USDT Payments

A Wednesday ruling by China’s Chaoyang Court has prohibited companies from using Tether (USDT) payments to pay their employee wages. Per the ruling, all affected companies must pay their owed wages and bonuses in the form of Renminbi (RMB). In addition, the court also states that virtual currency “should not and cannot be circulated” in the market as a form of currency.

How USDT payments came to be banned in China

Before now, some Chinese blockchain-related companies were fond of paying their employees in crypto, especially the USDT. However, in what would turn out to be a major game-changer, a plaintiff named Shen reportedly filed a lawsuit against a network technology company (the defendant) he works at.

According to the filing, Shen – who is the Vice president of the company, claims that the defendant paid wages in USDT. In its ruling, the Chaoyang Court cites the “Labor Law” which stipulates that wages can only be paid to an employee in the form of currency. And seeing as Tether (USDT) is not a legal tender, the court ruled in favour of the plaintiff.

China’s stance against crypto persists

This new ruling further establishes China’s die-hard stance against the use of cryprocurrency on all fronts. Recall that last year, the Chinese government began an all-out crackdown against crypto mining and trading. That crackdown soon saw miners and other crypto-based firms leaving the country in search of more favourable locations.  

More recently, Tether’s stablecoin has also been the subject of constant scrutiny since de-pegging shortly after the Terra-LUNA crash. And there are also rumors that USDT reserves have exposure to highly-indebted Chinese real estate firm Evergrande. But Tether’s Chief Technology Officer Paolo Ardoino has since debunked those rumors in a tweet. Ardoino insists that the platform can offer liquidity to it users who are in need of USDT redemptions.

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