Russian traders are selling millions of dollars worth of Tether (USDT) to Chinese buyers daily. USDT reportedly gained popularity over Bitcoin (BTC) as a means to bypass China’s strict capital control acts in 2018 after BTC prices plummeted.
A report published by CoinDesk recently detailed the operations of a Russian USDT broker donning the pseudonym ‘Oleg’. Oleg estimates that this over-the-counter (OTC) trading desk sells approximately $3 million worth of cryptocurrency each day, with the vast majority of his customers comprising Chinese merchants.
Roughly 80% of his business consists of USDT sales, with BTC sales constituting the other 20% of his operations.
Chinese Merchants Purchase Over $10 Million Worth of USDT From Russian Traders Daily
Maya Shakhnazarova, Huobi Russia’s head of OTC trading, stated that Chinese merchants “accumulate a lot of cash in Moscow and need tether to transfer it to China. [...] There are a lot of OTCs here in Moscow City, a bunch of offices in every building, and the volumes for them all can reach several dozens of millions of dollars a day. It’s all paid for in cash.”
“A client comes with cash, we register the price at exchanges, when we agree on a price, we make a deal,” continued Shakhnazarova. “The client hands over cash and a wallet address, the seller sends USDT to the wallet.”
Russian OTC broker, Roman Dobrynin, emphasized the impact that the 2018 bear market had in driving down demand for BTC among Chinese merchants. “As the price was going down, tether became much more convenient to use,” said Dobrynin. “China is totally reliant on USDT, they trust in it a lot, plus it’s very liquid.”
Based on the calculations of various Russian OTC traders, the report estimates that Chinese merchants purchase between $10 million and $30 million worth of USDT each day.
Chinese and Russian Traders Unfazed by Controversy Surrounding USDT Peg
The controversy surrounding USDT’s purported peg to the U.S. dollar and the testification by Tether’s general counsel that the token was only 74% backed by fiat and short-term securities as of April 30, 2019 appears to be of little concern to Russian and Chinese tether traders.
According to Vladislav Bulochnikov of crypto wallet provider Chatex: “USDT will stay propped by the power of habit and trust of its users. Even if it loses half of its backing — it’ll still be out there.”
“Nobody actually cares if tether is backed or not,” added Konstantin Plavnik, the chief operating officer of Moscow-based cryptocurrency derivatives exchange, Xena.