China, though technologically advanced, is one of the countries with the strictest regulation on cryptocurrency.
The country has banned cryptocurrency before and placed a restriction on the activities of people dealing in cryptocurrency, thus leading to increased peer-to-peer crypto trading as citizens insist on using cryptocurrency.
The country has however relaxed its stringent restrictions. In fact, it recently confirmed that it will be launching its own digital currency soon.
The relaxed regulation is however likely to be reversed soon, according to an analyst Dovey Wan, as Tether gets ready to launch another stablecoin pegged to CNH, offshore Chinese Yuan Renminbi.
“Pissing” the Chinese regulator
The new stablecoin known as CNHT is to be pegged to the CNH, a Chinese Yuan that is used to trade outside of China.
Tether’s other stablecoin USDT is currently traded against the CNY, the Chinese Yuan that is used within China.
According to Wan, the new stablecoin will be facing significant hurdles as traders are likely to stick with USDT and CNY which they are used to, rather than use CNH which is exposed to competition from the USD by the way.
Disturbing as this may seem, it is not the worst thing about CNHT.
The launch is also bound to alert the Chinese regulator and this is likely to renew the fight against cryptocurrency and all related digital money, Wan noted.
“Not sure what’s the material upside of having CNHT for Tether, plus pissing of Chinese regulator,” she wrote.
If the war against cryptocurrency gets re-ignited in China, not only CNHT but the entire industry will suffer the consequences when the government strikes.
This may be bloody not just for Chinese industry players but for the industry at large especially now that the market is in a critical zone.
China demand for USDT still on the rise
According to reports, Tether demand in China is greater than that of the west and the world at large.
As at the beginning of June, Chinese exchanges had received $10 billion worth of USED already.
This represents over 62% of the amount received in 2018 which is $16 billion.
Considering we have just entered the second half of the year, 2019’s USDT volume in China may be reaching new highs that beat global demand even more.
Looking at this fact, Wan may be right that the new stablecoin is not likely to compete favourably with USDT and at the same time create a problem for the industry.
This may also affect Tether significantly seeing it is already in court over issues with USDT. if China gets on its back again, things could get really ugly and the extent is unknown.
As far as Wan is concerned, there is no justification for the new stablecoin. It will be interesting to see how things turn out if Tether does launch the new CNH stablecoin.
What do you think? Will the launch trigger another crypto fight and will CNH compete well in China?