Tether’s Booming Popularity in China Sparks a New Wave of Crypto Crackdowns
Tether (USDT) has seen massive inflows of capital throughout 2020, with much of this coming about not as a result of turbulence within the crypto market, but rather due to that seen in the traditional markets.
Investors in countries where access to “safe haven” fiat currencies like the US Dollar is limited have widely begun purchasing USDT to hedge their portfolios.
This has caused the stablecoin’s market cap to see massive growth, climbing over 100% since the start of the year.
Much of this money has originated from China, and the country now appears to be starting a new wave of crypto crackdowns due to the increasing popularity of USDT.
According to one China-focused reporter, the government is now focusing its crackdown on OTC trading, with multiple agencies and government-linked companies leading the efforts to halt crypto trading.
In a report, they note that USDT’s primary purpose in the country is to aid in the laundering of money.
China Drives Massive Demand for Crypto Stablecoin Tether (USDT)
The US Dollar is widely thought to be the most secure currency to hold during times of global economic turbulence.
This stability is due to the size and strength of the country’s economy, as well as the power held by its central bank.
Throughout the pandemic-related economic decline seen across the world, many fiat currencies have shed a significant amount of their value, while USD has remained stable.
This has led many individuals in countries like China to turn to crypto-based solutions to hedge their portfolio, using stablecoins such as Tether (USDT).
The growing popularity of this crypto-token in China has helped lead its market cap to rise from $4.6 billion in January of 2020, to recent highs of $9.2 billion that were set just this past week.
Chart of USDT's market capitalization over time from TradingView.com
It doesn’t appear that these inflows are slowing down either, and they will likely continue until the global economy starts showing signs of a rebound.
The Chinese Government is Taking Notice of USDT’s Growth
The Chinese government appears to have taken notice of the meteoric growth seen by the stablecoin.
According to one China-focused market commentator, the country is now conducting a major crackdown on OTC crypto trading – specifically focused on USDT.
While referencing a report, she said:
“The crackdown on OTC in China since last month is by the far the most strict and widely affected one, is caused by USDT is widely used for money laundering… the action [is] led by the PBOC, ministry of public security, central administration of customs, CBIRC, union pay…”
She further went on to explain that many users of popular crypto OTC desks in the country have had their bank cards frozen for buying and selling USDT, while some brokers have been arrested.
Featured image from Shutterstock.
OhNoCrypto
via https://www.ohnocrypto.com
Cole Petersen, Khareem Sudlow