#USDT Why doesn't China like USDT?

Many people have a question: USDT is so easy to use—fast transfers, stable prices, worldwide acceptance. So why has China always taken a tough stance towards it? Some even think: Is it because they "don't understand new technology"? Or are they "afraid of blockchain"? But if you truly understand USDT's position in the financial system, you'll realize—this isn't about liking or not liking.

In one sentence: China doesn't dislike USDT; it simply cannot allow USDT to be "used as money" within its borders. Because once it’s unleashed, it challenges not just a single industry, but three fundamental financial bottom lines: capital controls, foreign exchange system, and monetary sovereignty. These are zero-tolerance risks in any sovereign country.

1⃣️What exactly is USDT?

Many people consider USDT a kind of "cryptocurrency," but in the eyes of regulators, its true identity is: a "shadow dollar" not controlled by any central bank.

It has several key features:

- Pegged 1:1 with the US dollar
- Circulates 24/7
- Peer-to-peer transfers
- No banking system involved
- Almost no border restrictions

In other words: USDT is a dollar settlement network that bypasses traditional financial systems. That is the root of the problem.

2⃣️Why is USDT especially sensitive for China?

1. It can directly bypass foreign exchange controls

A core design of China's financial system is: controlled capital accounts, with gates on cross-border funds.

USDT’s usage path is: RMB → OTC trading → USDT → global assets, without banks, without using foreign exchange quotas, and without cross-border approval.

What does this mean? The "funds gates" at the national level are being directly bypassed. Once scaled, the only result is: capital controls become meaningless.

2. It has become a "highway" for gray funds

In reality, USDT is widely used for:

- Transferring scam funds
- Underground currency exchange
- Gambling settlements
- Money laundering in gray industries

The reasons are very simple:
- Stable, not afraid of sudden price swings
- Fast transfers, low costs
- Not reliant on bank accounts

From a regulatory perspective, USDT is not a "neutral tool," but rather: a tool that greatly reduces the cost of illegal fund flows.

3. It fosters "dollarization" of public financial perception

This is the most easily overlooked but most profound risk.

When more and more people in a society: record accounts in USDT, price goods in USDT, store value in USDT, what does it fundamentally mean?👉 The US dollar is entering the grassroots circulation layer through encrypted channels.

This is not a technical issue, but a shift in monetary psychological anchoring. For any country emphasizing its own currency sovereignty, this is unacceptable.

3⃣️Is China really "opposed to blockchain"?

The answer is quite the opposite. China has never opposed blockchain technology itself, but rather:

❌ Private issuance
❌ Lack of control
❌ Cross-border free flow of "currency"

The logic is simple: technology can innovate, but money must be controllable.

4⃣️Then why not develop a "RMB version of USDT"?

Actually, there already is—Digital RMB (e-CNY). But their design philosophies are completely different:
USDT Digital RMB
Issued by private companies Issued by the central bank
Decentralized Highly centralized
Hard to regulate Regulated
Global free circulation Controlled scenarios

In one sentence: USDT is a "de-nationalized currency," while Digital RMB is a "technologically upgraded sovereign currency." So... in theory, they are not the same thing...

5⃣️What is the real conflict?

Many people interpret this as China vs. cryptocurrency.

But the real contradiction is: sovereign states vs. private global currency networks.

If USDT is just a tool within a small circle, it’s a gray area; but once it becomes a mainstream settlement layer, it challenges: who defines "money," who controls liquidity, and who bears financial risks.

On this matter, China’s stance is very clear and very firm.

Therefore, the more successful USDT is, the more "dangerous" it is for Chinese regulation. So what you see is not a wavering attitude, but an unchanging bottom line: technology can be discussed, transactions can be regulated, but monetary sovereignty must not be compromised.