Millions in Crypto Is Crossing the Russia-China Border Daily. There, Tether Is King

Chinese importers in Russia are buying up to $30 million a day of tether from Moscow's over-the-counter trading desks.

Despite longstanding questions about USDT's collateral, in this market "Nobody actually cares if tether is backed or not," says one Moscow trader.

Why tether? It has the usual advantages of crypto - no limits on how much money can be sent or where - without the volatility that makes most coins infeasible for moving millions across the border daily.

Back in China, the merchants can exchange USDT for fiat easily, even though the People's Bank of China banned fiat-to-crypto spot trading in September 2017, forcing the exchanges to move out of the country and limiting trading to crypto-to-crypto pairs.

Chinese traders who need to liquidate crypto assets into Chinese yuan can still go to an OTC market maker, such as those registered on exchanges like Huobi and OKEx, to get matched with buyers and send them crypto after receiving a wire transfer via a bank, AliPay or WeChat Pay.

Critics of Tether have long questioned whether the stablecoin was fully backed 1:1 with dollars, as the company long insisted.

The NYAG case revealed that Tether had loaned a big chunk of its capital reserves to Bitfinex, an exchange with overlapping management and owners, leaving the coin only 74 percent collateralized by cash and equivalents.

"Nobody actually cares if tether is backed or not," says Konstantin Plavnik, chief operating officer of Moscow-based crypto derivatives exchange Xena.

Confidence in Tether's solvency relies on long-time habit and convenience: this market needs tether, so tether is trusted.

The turnaround of tether is fast, so for the merchants using the token for remittances, whether it's worth something or not matters only within one day.