Paying Salaries in USDT is Illegal, Chaoyang Court of China Rules

Payment of salaries and wages in Tether (USDT) is now regarded as illegal in China. In a recent labor dispute lawsuit, the Chaoyang Court of China ruled against the use of USDT in business transactions. Also, the circulation of the digital asset as a currency is now termed illegal. 

The court said every business must pay in the recognized official currency of China which is the Renminbi (RMB). The local enterprises must also pay the arrears owed in RMB. Based on a post, this seems to be an expression of China’s animosity towards cryptocurrency and the Metaverse. 

Previously in China, many companies that are crypto-inclined pay their employees their wages in USDT. The workers could also get their pay in Bitcoin (BTC) as well as other digital coins. 

The Genesis of the Lawsuit

The lawsuit began as a result of a disagreement between Mr. Shen and the network company he worked for. Mr. Shen is the vice president of Products at the network technology company. He worked an irregular schedule and earned about 50,000 Yuan while in the firm’s service.

At the end of the month, several statutory deductions are done such as the removal of tax, social security, and provident funds. He ends up with 2574 RMBs and a few USDT as the others are converted to Tether. 

He attempted to resign in June 2020 but according to the firm, he needed to complete the projects at hand for which he claimed payment has not been cleared for. This led him to sue the network company seeking payment of his arrears, overtime and performance incentive. 

Meanwhile, the company already paid his salary based on performance in USDT. On hearing this, Mr. Shen insisted he wanted his payment in RMB. In his defense, USDT does not have legal status.

The Chaoyang Court ruled in his favor quoting the ‘Labour Law’. The law states that a worker himself should be paid his wages monthly in the form of a currency. To corroborate this, the Law of the People’s Republic of China on the People’s Bank of China declares Renminbi as the legal tender and currency of China.

The court supported and agreed with Mr. Shen. As compensation, the court’s ruling will have the shareholders pay Mr. Shen 270,000 RMBs for his arrears, performance bonuses, and annual bonuses.