The reasons behind the USDT to RMB negative premium

In fact, the premium of USDT over RMB being higher than the USD to RMB premium is due to three main reasons:

First: From a macro perspective, the RMB has been appreciating strongly against the US dollar. Since the second half of 2025, the RMB has continued to strengthen, with the official midpoint rate and spot exchange rate falling below 7.05, further approaching 7.03 in late December. The reasons include the continuation of the Federal Reserve's rate cut cycle, a weakening US dollar index, and improving Chinese economic data. Holding USDT is equivalent to indirectly holding US dollar assets, which results in exchange rate losses in the context of RMB appreciation.

In other words, the market expects the RMB to continue strengthening, leading to some exchange rate deviations, but this is not the main reason—only a minor secondary factor.

Second: Chinese regulatory policies have been significantly tightened. In early December 2025, the People's Bank of China and thirteen other departments jointly issued a document to strengthen crackdowns on virtual currency trading and speculation, explicitly bringing stablecoins (such as USDT) under regulatory scope, focusing on illegal cross-border capital flows, money laundering, and underground banks facilitated by USDT.

This has led many over-the-counter traders and market participants to suspend or reduce operations, tightening market liquidity. Some holders are worried about account freezes or regulatory risks and are eager to sell USDT for RMB, increasing supply while demand sharply decreases, directly pushing down P2P prices.

Historically, every time China has tightened regulations (such as the 2021 ban), USDT's off-exchange negative premium has appeared. This time, the crackdown is even more severe, so the deviation of USDT to RMB exchange rate will be greater.

Third: The overall crypto market is volatile, coupled with negative regulatory news, leading retail and institutional demand for USDT to decrease. Some investors in mainland China, aiming to avoid risks, want to quickly liquidate their USDT holdings, creating a negative premium cycle similar to the current Chinese real estate market.

Moreover, I believe that the current USDT to RMB price is not even at its lowest; the USD to RMB exchange rate could fall below 6.8, let alone the USDT to RMB premium.

The decline of USDT's premium over RMB is not simply a currency exchange issue but a result of regulatory upgrades causing USDT to "disappear functionally" within the Chinese system. When a tool only carries risks and no longer provides efficiency, discounting is a reasonable valuation, and this process is difficult to reverse quickly.