China’s authorities, led by the Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE), are intensifying efforts against the use of cryptocurrencies like Tether (USDT) in cross-border foreign exchange transactions.
The SPP issued a joint statement, declaring USDT’s use as a medium of exchange between local and foreign currencies illegal. Local branches are urged to enhance coordination for enforcing stricter measures against “fraudulent foreign exchange purchases, illegal foreign exchange transactions, and other foreign exchange-related illegal and criminal activities.”
Meanwhile, Hong Kong is proposing the acceptance and regulation of “fiat-referenced stablecoins” (FRS), with issuers required to obtain a specific local licence. A joint consultation paper from the Financial Services and the Treasury Bureau and the Hong Kong Monetary Authority (HKMA) outlines the definition of fiat-referenced stablecoins and licensing requirements for FRS issuers, emphasizing full backing, segregation, safekeeping of reserves, and regular reporting. Notably, algorithmic stablecoins will not qualify for a HKMA licence.