Chinese importers in Russia are buying up to $30 million a day of tether (USDT) from Moscow’s over-the-counter trading desks.
- They use the cryptocurrency to send large sums back to their home country, which has strict capital controls.
Previously the merchants used bitcoin for this, but when the market crashed in 2018 they switched to tether, which is designed to maintain parity with the U.S. dollar.
- Despite longstanding questions about USDT’s collateral, in this market “nobody actually cares if tether is backed or not,” says one Moscow trader.
The cash-counting machines were softly buzzing in an office with floor-to-ceiling windows overlooking Moscow’s landmarks.
“Hear that sound?” asked the head of an over-the-counter (OTC) cryptocurrency trading desk — let’s call him ‘Oleg’ — who requested his real name and company be withheld. “You can hear it 24/7 in here.”
Business is brisk thanks to a constant flow of Chinese merchants who come in daily with heavy bags of cash. Oleg said his OTC desk sells about $3 million worth of crypto every day. Most of it usually goes to China. But what’s perhaps most surprising is which crypto.
Only 20 percent of Oleg’s sales are in bitcoin, the oldest cryptocurrency with the largest market capitalization. The other 80 percent is in the dollar-pegged token known as tether, or USDT.
Tether’s best-known application is allowing crypto traders to move money between exchanges quickly to take advantage of arbitrage opportunities. But according to several Moscow OTC traders, it has at least one real-world use case – as the go-to remittance service for local Chinese importers.