China’s Chaoyang Court on Wednesday in a labor dispute lawsuit ruled that companies can’t pay wages in Tether (USDT). Moreover, the court stated that virtual currency should not be circulated in the market as a currency. Thus, the enterprise must pay the arrears of wages and bonuses in Renminbi (RMB).
Chinese Court Ruled to Restrict USDT for Wages
Some companies involved in blockchain and digital assets business in China are using USDT or other cryptos to pay employees. In a lawsuit filed in the Chaoyang Court, a plaintiff named Shen claimed that the defendant, a network technology company, has paid wages in USDT, reported Beijing Daily. Shen is the vice president of products of a network technology company.
The court ruled that the “Labor Law” clearly specifies that wages should be paid to an employee in the form of currency. Moreover, Tether (USDT) is not a currency, but a virtual currency does not have the legal status of legal tender.
According to The Law of the People’s Republic of China on the People’s Bank of China, the legal tender of the People’s Republic of China is the “Renminbi.” It makes paying wages in USDT as illegal. The court cited the “Notice on Further Preventing and Disposing of Hype Risks in Virtual Currency Transactions” issued by the central bank, the Supreme People’s Court, the Central Cyberspace Administration of China, and other ten major departments in September 2021.
In fact, the Chinese government has a negative stance regarding cryptocurrency. The Chinese government’s crackdown against crypto mining and trading last year diminished the enormous influence of China in the crypto market.
Tether (USDT) should not be circulated in the market. The court supports Shen’s request to pay wages and bonuses in the form of RMB.
Tether’s USDT Relation to China
Tether’s stablecoin has been under continuous attack since its depeg after the Terra-LUNA collapse. Then after the Celsius, Three Arrows, and Voyager’s insolvency.
Massive amounts of USDT redemptions were performed by investors and hedge funds as many think USDT reserves have exposure to Chinese real estate firm Evergrande and Chinese commercial papers. However, Tether’s CTO Paolo Ardoino has neglected those claims.
Today, Paolo Ardoino said in a tweet that Tether is able to provide liquidity to customers asking for USDT redemptions.
“While if in the same timeframe, the net balance is negative by -15B, it means that the stablecoin was able to give back the money to customers asking for redemptions without using other customers’ money and can realistically claim that it has great liquidity and is safe.”
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