As reported by Beijing Daily, the decision came after Mr. Shen, an employee of the local blockchain company, sued his employer for refusing to pay his wages in RMB. According to Shen, the company instead paid his salary and bonuses in USDT stablecoin, a decision he wasn’t happy with.
The court fully supported the plaintiff’s claim, pointing out that wages should be paid in the official currency. As digital currencies, including Tether, do not have the same legal status as RMB, Shen’s request fully complies with the law. Consequently, Chaoyang Court ordered the company to pay a total of more than 270,000 RMB ($40,000) in wages, performance bonuses, and annual bonuses owed to the employee.
In May-September 2021, China introduced a blanket ban on cryptocurrency mining and trading, triggering a flight of mining companies known as the Great Migration. However, the recent data from the Cambridge Centre for Alternative Finance suggests that a significant number of miners found ways to sidestep regulations, as China’s hashrate in the Bitcoin network rebounded to 20% after dropping to zero in July-August.
Tether’s stablecoin USDT is the third-largest cryptocurrency in terms of market cap after Bitcoin and Ethereum. After the collapse of Terra’s algorithmic stablecoin UST, Tether and other stablecoin issuers found themselves under the renewed scrutiny of financial regulators worldwide. The regulation, however, doesn’t necessarily mean the draconian measures introduced by China, as legalizing stablecoins could bring many benefits for underbanked people.
The main challenge for authorities would be to find the golden mean between nurturing digital innovation and safeguarding financial stability, S&P Global estimates.