Tether ties to China and CNHT stablecoin wind-down

​Tether is ceasing the issuance of CNHT—a stablecoin pegged to the offshore Chinese yuan. After several years of existing, the project failed to gain mainstream popularity. However, CNHT is not just another token; it is a story of a complex relationship between the world’s largest stablecoin issuer and a country systematically fighting against cryptocurrencies. 

Tether's ties to China began forming long before the emergence of CNHT. Part of the company's history is linked to the business activities of its founders and executives in China and Hong Kong.

One of Tether's creators, Brock Pierce, was involved in the virtual goods market for online gaming before the company was founded. A significant portion of this industry operated through Chinese players who “mined” digital resources in games to sell them to Western markets.

Later, key Tether executives—Giancarlo Devasini and Jean-Louis van der Velde—also worked in electronics importing between Europe and Asia. Part of their business was connected to Chinese manufacturers, and some companies even appeared among the shareholders of structures linked to Bitfinex and Tether.

It is no surprise that as the crypto market began to grow, China quickly became one of the key environments for the use of USDT.

USDT and the Chinese crypto-economy

In the second half of the 2010s, China was one of the largest centers of crypto activity in the world. Despite official restrictions, cryptocurrency trading primarily occurred through over-the-counter (OTC) platforms.

USDT became the primary currency for such operations. Chinese traders and entrepreneurs used the stablecoin for cross-border settlements, particularly in trade schemes between China and Russia. In some cases, sellers received cash for goods in Russia, converted it into USDT via OTC dealers, and sent the funds back to China.

In certain instances, this infrastructure was also utilized for illegal operations. Chinese police have repeatedly reported money laundering schemes involving USDT. For example, in 2022, a group was arrested for laundering approximately $1.7 billion using the stablecoin as their primary tool.

Analysts noted that the popularity of USDT in China was also tied to capital controls. Stablecoins allowed users to bypass the traditional financial system and transfer money abroad faster and more easily.

Lender of last resort: The Babel Finance story

Another episode illustrating the depth of Tether's connection to the Chinese crypto market was the story of the lender Babel Finance.

Before its collapse, Babel was one of the largest crypto lenders in China. The company actively worked with local miners and traders, providing loans against crypto assets and financing various trading strategies.

In 2020, questions began to arise regarding the company's stability. A whistleblower informed Decrypt that Babel was using client funds for risky leveraged trading operations. The same report claimed that a loan from Tether effectively served as a financial lifeline that allowed the company to continue operating.

At the time, Babel Finance denied any issues, claiming the company had never lost client funds or faced liquidations. However, in 2022, Babel was forced to halt withdrawals and begin a restructuring process. According to company documents, losses from proprietary trading using client funds exceeded $280 million. During restructuring, the total capital deficit grew to over $750 million. To settle with creditors, Babel even proposed issuing its stablecoin.

The Babel story served as another reminder of how deeply Tether was integrated into the Chinese crypto ecosystem as a source of liquidity for local firms.

The yuan experiment

In 2019, Tether decided to take the next step by launching CNHT—a stablecoin pegged to the offshore yuan (CNH). While the dollar-pegged stablecoin became the bedrock of the crypto market, a yuan-based stablecoin could theoretically serve as an alternative settlement currency for Asian traders.

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However, CNHT never achieved popularity. Throughout its existence, only about 20 million tokens were issued, and the user base remained minimal. Even an integration with the TRON blockchain in 2022 failed to move the needle. Demand for a yuan-denominated stablecoin remained too low to sustain its development.

The final blow to CNHT came from new Chinese regulatory rules. In 2026, China introduced new banking regulations for cryptocurrencies and stablecoins known as Regulation 42. The document explicitly prohibits any company—both Chinese and foreign—from issuing stablecoins pegged to the yuan without official government authorization.

Effectively, this makes private yuan-based stablecoins illegal.

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Shortly thereafter, Tether announced it would cease issuing CNHT and allow token holders to redeem their assets within a one-year window. Officially, the company attributed the decision to low interest and limited community demand. However, the new Chinese regulation makes the continued existence of such a token practically impossible.

How Tether’s market geography is shifting

For many years, the Chinese crypto market played a vital role in the proliferation of USDT, from OTC trading and cross-border settlements to various financial schemes. It was in this environment that Tether gained a significant portion of its liquidity and real-world utility.

Today, the situation has changed. China is consistently pushing private cryptocurrencies out of its financial system, while Tether is increasingly integrating into the Western crypto-economy.

In the U.S., it has been the leading stablecoin for nearly a decade. Numerous executives and shareholders are now billionaires. Howard Lutnick (who used to purchase all of Tether’s t-notes) now serves as a financial intermediary for President Donald Trump. Furthermore, a sister version of Tether (USAT) was recently launched for use by U.S.-based clients.

The story of CNHT demonstrates that the global stablecoin market is shaped not only by user demand but also by state policy. In this system, even the largest stablecoin issuer is forced to adapt to geopolitics.