USDT sell-off against yuan intensifies on crypto OTCs after China's crackdown

China's intensified crackdown on crypto trading appears to have spooked some retail users into selling USDT on over-the-counter (OTC) markets on crypto exchanges.

Within a day of China releasing its toughened measures, the quotes for buying and selling USDT against the Chinese yuan on OTC merchants on Huobi, OKEx and Binance have dropped below 6.2 yuan per USDT.

As of press time, merchants on the three biggest exchanges that cater to Chinese crypto users are posting quotes for around 6.19 yuan per USDT. Merchants on crypto exchange Huobi are even posting quotes for 6.12 yuan per USDT.

Historical data seen by The Block shows that prior to China's release of the intensified measures, the quotes on these exchanges were above 6.37 yuan per USDT, which already represented a 1.5% negative premium compared to the exchange rate between the US dollar and the Chinese yuan.


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But over the past day, the negative premium has enlarged to now 4.3%. In the foreign exchange market, one US dollar is worth about 6.47 Chinese yuan. 

The People's Bank of China, along with nine government and judicial agencies, said in the latest crackdown statement that all crypto-related services are now treated as illegal, which included any service that lets users exchange fiat currencies for crypto assets.

So far, Huobi, OKEx and Binance have not made any moves regarding their yuan OTC marketplaces. The peer-to-peer method through OTC merchants is currently the only way for China-based users to fund their crypto trading with fiat currencies and also the only way for them to cash out.

OTC merchant quotes for USDT against Chinese yuan on Huobi

About Author

Wolfie joined The Block’s news team in 2020 and switched to the research side in 2021 to focus on crypto mining analysis. Prior to The Block, he had been a journalist at CoinDesk for three years. Wolfie has a background in financial journalism.