Altcoin News: Tether Is Actively Used by Chinese Merchants to Withdraw Cash Proceeds from Russia

July 30, 2019, by Marko Vidrih on ALTCOIN MAGAZINE

Merchants from China are actively using the services of Russian over-the-counter crypto platforms when they need to transfer the proceeds back to their home countries, CoinDesk writes.

The head of one of these sites said that they sell an average of $3 million worth of cryptocurrency per day — most of this amount is usually sent to China. At the same time, Bitcoin accounts for about 20% of the volume of transactions, while 80% of the funds received are transferred to USDT.

According to some Moscow over-the-counter traders, the volume of transactions with USDT, initiated by Chinese importers, reach $10–30 million per day.

“They accumulate a lot of cash in Moscow and need tether to transfer it to China,” said Maya Shakhnazarova, head of OTC trading at Huobi Russia, the Moscow office serving high-roller clients of Singapore-based exchange Huobi Global. “A client comes with cash, we register the price at exchanges, when we agree on a price, we make a deal. The client hands over cash and a wallet address, the seller sends USDT to the wallet.”

Chinese importers in the gray market used Bitcoin before the fall in 2018, another OTC dealer said. While prices continued to rise, intermediaries helped them acquire cryptocurrency, thanks to which they could additionally increase their revenues. However, in 2018, using Bitcoin for such transfers became too risky.

“As the price was going down, tether became much more convenient to use. China is totally reliant on USDT, they trust in it a lot, plus it’s very liquid. His own clients are mostly Chinese, and they usually find him by word of mouth, connecting via Telegram,” said the source.

Despite China’s restrictions on cryptocurrency trading, local traders can still withdraw assets from the USDT to the yuan through over-the-counter markets served, for example, by Huobi and OKEx.

However, they are not worried about the possibility of Tether not having sufficient reserves to provide all the USDT in circulation. Over-the-counter traders pay attention to the fact that the average daily trading volume of the USDT is several times higher than the capitalization of the instrument, as evidence that people use the same tokens to convert assets several times a day. So, on July 29, the 24-hour USDT trading volume amounted to $17.5 billion with a capitalization of $4 billion.

USDT allows you to quickly convert capital so that traders who are used to using it do not have to think about how much stablecoin will cost tomorrow. Large volumes of USDT are almost instantly transferred to China, where they are then converted into yuan, representatives of the cryptocurrency business in Moscow say.

Cryptocurrencies attract Chinese traders also because the local authorities have established strict control over the turnover of capital and limited the amount of $50,000 per year available for buying or selling foreign currency per person. Citizens may apply for an increase in quota, but it will still be limited.

Last April, according to RBC, the director of the department of financial monitoring and currency control of the Bank of Russia, reported that the monthly turnover of retail shadow trade is about 600 billion rubles a month. Presumably, 90% of the trade operators of this market are represented by Chinese manufacturers and traders.

“We practically do not observe transfers to bank accounts,” said Polupanov. — We see the acquisition of a large part of the cryptocurrency revenue, which is nowhere considered anywhere. We see the instant direction of cryptocurrency by e-mail directly to the home of these merchants and manufacturers and its conversion is already in the local currency.”

Author: Marko Vidrih