![]() ![]() Though many speculate that the e-CNY leverages blockchain technology, the PBOC has stated that the design of the e-CNY borrows only a few minor technical elements from bitcoin and does not leverage upon the blockchain technology’s ledger-like system. At a 1:1 exchange rate, one e-CNY is worth the same as one yuan in paper currency, and each will be exchangeable with the other. With its issuance facilitated by the People’s Bank of China (PBOC) - China’s central bank. Like the Chinese paper currency, the e-CNY as a legal tender means that no entity in China can refuse it. The e-CNY in contrast, is China turning legal tender into computer code. Still, the use of these payment applications is merely a way to move money electronically. The movement towards a cashless society, with the prolific use of payment apps such as Apple Pay in the US and WeChat and Alipay in China, gives the pretense that money is already virtual. As the e-CNY rapidly accelerates in scope and size with several successful pilots, there is an anticipated widespread usage for the e-Yuan domestically and internationally. Residents could use one of the two banking applications - JD.com or Jingxi to apply for the chance to win one of the 200,000 red packets, with each envelope containing over USD$31 in digital currency that can be used with selected merchants. The latest one saw China hand out an estimated USD$6.2 million of digital currency to citizens in Beijing in the form of a lottery. In 2014, Beijing first announced its research into the “Digital Currency/Electronic Payment” system and launched several electronic Chinese yuan pilot programs. However, another equally probable reason could be China’s development and launch of its very own centralized digital currency (CBDC) or the e-CNY. This then begs the question of why now? On first impression, experts have cited environmental considerations, cryptocurrencies’ price volatility and, financing for illegal activities as reasons. Yet, today we are witnessing the harshest restrictions ever. In July 2018, 88 virtual currency trading platforms and 85 ICO platforms had withdrawn from the market.By 2017, Beijing had placed a ban on all forms of capital-raising via issuing tokens, thus forcing many Chinese cryptocurrency investors to park their investments overseas.As early as 2013, when bitcoin was less than US$1,000 (a fraction of today’s value), Chinese banks were banned from dealing in bitcoin.Even prior to the popularity of cryptocurrencies such as bitcoin, China remained a staunch opponent of this technology. However, the current set of regulations implemented by the Chinese government should not warrant surprise. The exodus has been dubbed as the ‘great mining migration.’ The ferocity of these restrictions has resulted in major bitcoin mining and trading companies leaving China in favor of neighboring countries - Russia and Kazakhstan and even to states within the US ( which have a crypto-friendly political stance). Since May of 2021, the Chinese government has begun to aggressively crackdown on crypto-mining operations. ![]()
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