Tether (USDT) Wage Payments Banned in China: Courts Rule Against Crypto Salaries

In a landmark ruling, China's Chaoyang Court has declared that companies operating within its jurisdiction cannot pay wages using Tether (USDT) or other cryptocurrencies. This decision reinforces China’s ongoing stance against the use of digital assets within its financial system. The recent ruling stems from a labor dispute lawsuit where a plaintiff reported receiving half of his salary and bonuses in USDT instead of the legally recognized RMB.

According to a Beijing Daily report, the court's decision, handed down by Beijing’s Chaoyang District People’s Court, explicitly prohibits the use of crypto and stablecoins like Tether for wage payments. The ruling clearly states that virtual currencies are not a legal form of payment. A Chinese court has reaffirmed the legal status of cryptocurrency as distinct from fiat currency, emphasizing that it falls outside the regulated financial framework.

The core issue lies in China's general ban on the circulation of digital assets. A Chinese court has stated that virtual currencies like USDT are not recognized by the government. Therefore, employers cannot circumvent traditional payment methods by utilizing USDT or other cryptocurrencies to compensate their employees. The court cited this as the reason it sided with the plaintiff, reinforcing that companies must adhere to existing labor laws and pay wages in RMB.

This ruling serves as a significant precedent for labor disputes involving cryptocurrency payments in China. It sends a clear message to businesses that circumventing regulations by paying in USDT, or any other crypto asset, is illegal and will not be supported by the Chinese legal system. The court order specifies that local companies can’t pay their workers' wages with USDT, reinforcing the prohibition on the use of cryptocurrencies in wage settlements. This development underscores the challenges faced by cryptocurrency adoption in countries with strict regulatory frameworks.