USDT is a digital currency pegged 1:1 with the US dollar, primarily used for buying and selling various digital currencies on cryptocurrency exchanges, providing traders with a stable value reference.
USDT can also be used for cross-border remittances, value storage and transfer, and as an introductory tool for popularizing digital currencies.
While USDT is not illegal in China, there are legal risks involved, which are detailed below.
Is USDT Legal? USDT is a virtual currency that pegs cryptocurrencies to the US dollar, issued by Tether Limited in July 2014.
Claiming strict issuance based on the “US dollar standard,” for every USDT issued, there is a corresponding US dollar in a bank account to maintain stability, hence the name stablecoin.
USDT is a blockchain-based digital currency, and its issuance and transactions are protected under US law.
Currently, there are no explicit legal prohibitions against personal USDT over-the-counter transactions in China, but there are certain legal risks involved.
Mainly, China does not allow platform trading of virtual currencies and does not recognize their legal status as currency, but it does not deny their legitimate status as virtual property or goods.
When engaging in USDT transactions, consider the following:
1. Avoid offline transactions or dealing with fixed parties due to the lack of effective KYC (Know Your Customer) mechanisms, which could lead to receiving “dirty money” or “dirty coins”;
2. Choose legitimate, secure, and reliable trading platforms or information platforms for matched transactions, where buyers and sellers register as platform service providers, and the platform matches transactions based on the parties’ activities;
3. Increase anti-money laundering efforts by incorporating video verification, real-name mobile accounts, and real-name bank cards that correspond one-to-one;
4. Avoid unrestricted high-frequency, large transactions, frequent card changes, or wallet address changes that may raise suspicions from judicial authorities.
What are the Uses of USDT? The primary uses of USDT include:
1. A bridge for trading platforms: USDT can be used for buying and selling various digital currencies on cryptocurrency exchanges, offering a stable value reference for traders. For instance, if you wish to purchase Bitcoin with RMB, you can first buy USDT with RMB in the OTC market and then use USDT to buy Bitcoin on the exchange.
2. Cross-border remittances: USDT can serve as a tool for cross-border remittances, being more efficient and economical than traditional methods due to its stability and low transaction fees. For example, if you want to send money to relatives abroad, you can buy USDT with your local currency and then send the USDT to their digital wallet address, allowing them to exchange USDT for local currency.
3. Value Storage and Transfer: USDT can serve as an ideal choice for value storage. In certain countries where the local currency is at risk of devaluation, people may opt to convert their assets into USDT to preserve their value. Moreover, USDT can also function as a tool for value transfer, especially in countries with restrictions on digital currencies. For instance, if you wish to transfer a portion of your assets overseas, you can first purchase USDT with your local fiat currency and then store the USDT in a secure digital wallet.
4. An Introductory Tool for Popularizing Digital Currencies: For many newcomers to digital currencies, USDT might be their first encounter. Due to its peg to the US dollar, new users can more easily understand and accept the concept of digital currencies. For example, if you want to learn the basics and operation methods of digital currencies, you can start by purchasing a small amount of USDT with fiat currency and then experience different digital currency trades on exchanges.
The content above answers the questions ‘Is USDT legal? What are the uses of USDT?’. While USDT is not legal in our country, trading is not prohibited. Moreover, USDT is not just a trading tool; it plays multiple roles in the world of digital currencies. With technological advancements and market development, we can anticipate that the application scenarios for USDT will become more diverse and abundant.
