On July 20, 2025, the People's Court of Pudong New Area in Shanghai disclosed a case of illegal foreign exchange transactions involving USDT, totaling $6.5 billion over three years.
Illegal Forex Operations in Shanghai
The Shanghai court unveiled illegal forex dealings executed by Yang and Xu through shell companies. Yang, located abroad, managed foreign clients while Xu handled domestic transactions, revealing coordinated efforts. Prosecutors confirmed the operation exploited stablecoins to bypass currency restrictions.
Challenges of Cryptocurrency Regulation in China
Despite strict controls, such schemes continue to emerge, highlighting legislative gaps. Experts speculate that increasing regulatory scrutiny may lead to stricter controls on digital asset transactions in China. Meanwhile, stablecoins like USDT continue to be integral for cross-border transactions.
The Future of Stablecoins Under Regulatory Scrutiny
Notably, in 2020, Chinese authorities cracked down on similar schemes in Beijing and Chongqing that also relied on stablecoins for unauthorized transfers. The increasing regulatory pressure might affect the global perception and usage of stablecoins, which remain relevant due to their liquidity and pegged value.
The revelation of the operation in Shanghai serves as a reminder of the ongoing risks associated with cryptocurrency regulation in China. Such operations underscore the need for enhanced legal frameworks to effectively manage crypto assets.
