Although Chinese authorities previously prohibited crypto trading and mining and prompted the closure of several crypto-related enterprises, some local companies still pay their employees’ salaries and bonuses in stablecoins like Tether’s USDT.
However, China’s Chaoyang Court has outlawed companies from employing stablecoins like USDT to pay wages.
Chinese Court Rules Salary Payments In USDT As Illegal
A stablecoin is a cryptocurrency meant to be redeemable for a defined amount of a less volatile monetary asset, such as a fiat currency. Such coins are intended to give efficiencies and utility to blockchain-based payments.
Shen, the vice president of products at a local blockchain technology company, sued his employer in court for paying his wages and bonuses in USDT instead of the renminbi (RMB) — also known as the Chinese yuan.
The court declared that virtual currencies should not be distributed in the market as money, implying that all employers are compelled to pay their personnel exclusively in RMB. The court also referenced Beijing’s complete ban on cryptocurrencies launched in September 2021, stating that the top stablecoin and other digital currencies do not possess the same legal standing as the country’s legal tender.
The court supports Shen’s request for wage payments in RMB as it conforms with the “Labour Law” and has ordered the defendant to pay the plaintiff over 265,000 RMB in salary and bonuses.
The Chinese court illegalises salary payments in USDT. Image: Thedailyencrypt
USDT Maintains Dollar Parity
Stablecoins have recently acquired a substantial portion of the crypto market value, while the bulk of cryptocurrencies has decreased in pricing. This is despite the May death spiral of the once third-biggest stablecoin in the market, Terra USD (UST), which generated a flood of redemption as investor trust plummeted.
Tether chief technical officer Paolo Ardoino stated that various hedge funds have been attempting to short USDT, meaning that they are betting on the stablecoin losing its 1:1 peg with the U.S. dollar.
There have also been worries surrounding USDT’s insufficient backing and its considerable exposure to defaulting enterprises and Chinese commercial debt. Ardoino rejected such allegations and insisted that Tether has adequate liquidity and can repay money to consumers seeking USDT redemptions without any problem.
Despite the tremendous market volatility in recent days and the Chinese court forbidding salary payments in USDT today, the stablecoin is presently valued at $1.00 – at parity with the U.S. dollar as planned.