Yuan

Jun 21 2021

Chris Giancarlo: U.S. risks becoming ‘backwater’ without central bank digital currency

One of the few high-profile public officials to have served under both the Obama and Trump administrations, Chris Giancarlo is a former Wall Street executive-turn-regulator who is widely-respected by nearly all parties on Capitol Hill. As the former Chairman of the Commodities Futures Trading Commission, however, his latest venture, the Digital Dollar Foundation, might well test his soft touch with politicians.

The former regulator is now leading the Foundation towards five pilot programs set to launch this year, part of a broader effort to help the United States regain the lead in a race against China towards a functioning CBDC.

According to Giancarlo, however, the US’s priorities when it comes to a CBDC shouldn’t merely be jingoistic:

“What’s very clear, [is] that China intends their digital yuan to be an instrument of state surveillance. […] And this is why it’s one of the reasons why the digital dollar project, we’re so animated, because we feel that our new mission is to make sure central banks wake up to this and the US Fed wakes up to this, that these social values that got us here, the rule of law, a free capital markets, free enterprise, zones of individual economic privacy, are ingrained in a new digital future of the US dollar, and that we don’t allow ourselves to be taken in by what China’s doing and match that state surveillance approach.”

However, the race to a CBDC isn’t merely about maintaining current US values, but also potnetially about unlocking new forms of smart contract-based value for the wider population.

“The notion of a digital currency, whether it be sovereign and non-sovereign, tied to smart contracts, allows money to solve the old problem of being able to move it in place, i.e. moving around the globe as easily as you could send a text message, but also move it in time. Heretofore, money was a temporal thing, but with a smart contract you can say, I want to program my money today to go to my one grandchild in the future once they graduate college and all of those contingencies can be programmed in. […] With a programmable digital currency, you can program it today to move around the globe in space, but move around the globe in time. And that is such, I think, such a powerful construct.”

Ultimately, this work is part of an effort to ensure that America maintains technological supremacy.

“You can’t stop the march of technology in time, and if you do, you become a backwater. We in the United States have always been open to innovation and we must be open to this innovation as well. In a prudent way, in a way that’s in correspondence with our society that expects investor protections and a role for government. […] And it’s one that I’m very excited to be involved in.”

Watch the full interview here:

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Chris Giancarlo: U.S. risks becoming \’backwater\’ without central bank digital currency

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Jun 17 2021

Shanghai Man: Economist says El Salvador ‘on road to death’, salaries paid in e-CNY …

Our Man in Shanghai has refused to let recent regulations slow down the news coming from China. Enterprise blockchain, central bank digital currencies and start up projects continue to make a positive impact in a region hoping to grow economic value through technology.

Death march for El Salvador

The debate around El Salvador continued this week as media and officials tried to digest the adoption of Bitcoin as a national currency. JPMorgan stated that there was little economic benefit, and John Hopkins University professor Steve Hanke warned that the move could “completely collapse the economy” of the small nation. The former Bank of China deputy governor Wang Yongli took a very hardline approach, by stating that volatility and a lack of regulation or controls would put the economy on a “road to death.” This quote, appearing in state run media The Paper June 9, was an unusually direct and colorful statement on the issue.

Crypto innovation can be productive

Zhou Xiaoquan, a former governor of the People’s Bank of China, had a few positive things to say about cryptocurrency as a technology on June 11. He spoke at an economic summit in Shanghai and noted the cryptocurrency innovation in China can be productive when it serves the real economy. He also took some shots at other countries, stating that people would be mistaken if they thought other countries were taking the same approach towards building financial services. Zhou, who is one of the most often-quoted economists in the country, felt there was little emphasis on the relationship between financial services and economic value elsewhere in the world. Based on the wild displays at the Miami Bitcoin conference a few weeks ago, his position might be more sound than others would care to admit.

Paid in e-CNY

China’s e-CNY tests continued with the first reported mass payment of salaries in Xiong’an, a district near the capital Beijing. According to Cointelegraph, the pilot received support from a number of national banks and saw subcontractors paying workers their salaries from a digital wallet.

Industrial blockchain worth $22.6B

On June 3, a government organization issued a report entitled the China Industrial Blockchain Development Status and Trend Report. According to the report, in 2020, 222 industrial blockchain policies were issued, 12,059 new blockchain-related patent applications were approved, and 776 new blockchain enterprises were established. The report also claimed that the current market size of the industrial blockchain sector was around $22.6 billion U.S. dollars. Industrial blockchain is an area that China is eager to grab control in, leading to this explosive growth in recent years.

Only 5X the fun

Leading exchange Huobi surprised futures traders by limiting them to only 5x leverage on perpetual swaps and blocking new users from accessing the feature altogether. Futures trading, particularly highly-leveraged futures trading, had always been popular features on exchanges like OKEx and Huobi. It will be interesting to see whether these new decisions to limit risk will be damaging to these large exchanges that still somewhat adhere to regulator rules. It’s also possible that it’s a short-term solution in order to avoid scrutiny during periods of tighter control.

Futures of Singapore

While Huobi was tightening controls on futures traders, Singapore-based platform SynFutures was completing a Series A for $14 million. The round was led by Polychain Capital and included names like Framework Capital, Pantera Capital, Bybit, Kronos Research, WOO Ventures, Wintermute, and IOSG Ventures. SynFutures is creating a trustless derivatives market where users can take positions on assets or anything that has an accurate feed, including Bitcoin, the price of gold, or even the Bitcoin hashrate. What many people don’t know is that the SynFutures team is composed of members from Matrixport, a financial service app that was an offshoot of massive Chinese mining conglomerate Bitmain. Now you know the whole story!

This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.

Shanghai Man: Economist says El Salvador \’on road to death\’, salaries paid in e-CNY …

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May 19 2021

China Ban Triggers Crypto Sell-off – Time To Invest in Bitcoin?

China’s relationship with the cryptocurrency industry has always been quite complicated. After a few years of keeping an eye on crypto, the country tried to ban it.

China declared that financial institutions were not allowed to provide services to crypto businesses, purposefully trying to suffocate the crypto sector within the country. However, it liked the idea of crypto, just not the decentralised part of it.

As a result, it started creating its own native cryptocurrency, the so-called digital yuan, which will be controlled by the central bank — the People’s Bank of China (PBoC).

The digital yuan is a central bank digital currency and as such is a digital representation of the yuan, which means it will exhibit none of the volatility of bitcoin and other private money networks.

China is expected to launch the digital yuan at the Winter Olympics in 2022. Large-scale pilots have been taking place for a year or more, with citizens receiving airdrops to use the coins. The digital yuan will be distributed via commercial banks and the large internet payment platforms such as WeChat and AliPay.

In trials it has been demonstrated how users can make transactions offline by simply touching two phones, dispensing with the need for a bank in middle as would be the case with current online payments, be it AliPay or PayPal.

China’s PBoC new joint statement

Some speculate that before it launches the digital yuan China first wants to clear the space, which would mean getting rid of every trace of decentralised cryptocurrencies.

Despite its ban on crypto, some businesses still managed to find loopholes they could slip through and continue operating in China, and the country decided that that will not do. So, it recently rehashed the old news on crypto payments, which originally emerged in 2017, about banning cryptocurrencies all over again.

More than that, this time, it also issued a joint statement from the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China. And, naturally, the PBoC itself participated also.

Did China statement have a greater impact than expected?

The new statement added new layers to the old crypto ban, thus eliminating even those businesses that were previously flexible enough to bypass the original law, which will likely cause another wave of crypto businesses to shut down or leave the country.

As mentioned, there is speculation that China may have done this in order to make the digital yuan the only useful cryptocurrency in the country by the time it launches. However, some also speculate that the new crackdown may have also had a role to play in causing the crypto price crash.

China Ban Triggers Crypto Sell-off – Time To Invest in Bitcoin?

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Mar 24 2021

China’s Central Bank Addresses Digital Yuan Privacy Concerns

The People’s Bank of China (PBoC) deputy director Mu Changchun has addressed privacy and anonymity concerns over its upcoming central bank digital currency (CBDC) project.

Changchun spoke at the China Development Forum in Beijing on Saturday.

Limited Anonymity Of CBDC

According to Changchun, it would be difficult for the digital currency to be fully anonymous. He said that the Central Bank needs to balance privacy for users with international consensus in risk control.

He elaborated the use of digital yuan not only as a payment method but also as a high-level financial surveillance tool.

The Central bank head said that the digital Yuan would provide privacy, but it would be limited. He said that the CBDC would have even more privacy than commercial payment products like bank cards, WeChat, or Alipay, tied more closely to the banking system.

China Cracking Down On Crypto Crimes

While giving reasons to why the digital Yuan would not be fully anonymous, Changchun said too much emphasis on anonymity would raise the cost of fighting crime and could bring severe consequences.

On the flip side, if the apex bank controls anonymity, it would mean that it will observe and monitor transactions taking place while the transacting parties would remain private. This way, PBoC still has the chance to analyze transactions to monitor crimes.

“A completely anonymous central bank digital currency is not feasible as it would violate anti-money laundering, anti-terrorist financing, and anti-tax evasion regulations,” Changchun said.

China has shown its commitment to tackling crimes, especially when it comes to the use of crypto to launder money. Beijing’s extensive crackdown on internet crimes has seen several young people sentenced to prison for laundering Bitcoin using platforms like Kucoin.

The country was said to have convicted almost 100 people since November 2020 for knowingly using USDT to launder over $30 million through OTC desks.

Meanwhile, China continues to lead major countries in developing and piloting a central bank digital currency (CBDC). However, the project has raised concerns around the amount of insight it would give authorities into users’ financial data and behavior.

In January, 100,000 Chinese received $31 million digital yuan via lottery for free in the Shenzhen region. Residents in the region can now use ATMs to convert digital yuan to cash on a test basis. The Postal Savings Bank of China is also developing physical wallet cards on which to store digital yuan.

China’s Central Bank Addresses Digital Yuan Privacy Concerns

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Mar 22 2021

China’s digital yuan will offer best privacy protection, says official

Chinese authorities are willing to ensure maximum user privacy for the country’s central bank digital currency, or CBDC, according to an official at the People’s Bank of China.

Mu Changchun, head of the People’s Bank of China’s digital currency research institute, spoke of China’s digital yuan privacy capabilities at the 2021 China Development Forum on Sunday, local news agency Sina Finance reported.

Mu stated that a completely anonymous CBDC “is not feasible” because a national digital currency must meet requirements related to Anti-Money Laundering, Counter-Terrorist Financing and anti-tax evasion. However, that doesn’t mean that China’s digital yuan lacks user privacy, he assured.

The so-called “controllable anonymity” approach is a key feature of China’s digital yuan, meaning that the government is providing certain tools to ensure maximum user privacy and financial security in conjunction with AML measures, Mu said. He stressed that telecom operators — which are involved in the research and development of the digital yuan — are not allowed to disclose personal data and phone numbers of users to third parties, including the central bank.

Third parties like e-commerce platforms are also not able to access the personal data of digital yuan users, as customer payment information is encrypted in the form of a sub-wallet, Mu explained. Additionally, the digital yuan features a wide number of technical capabilities to ensure privacy, including ID anonymization technology and a personal data protection system and internal control management mechanism in accordance with relevant Chinese laws, the executive noted.

In order to protect “reasonable” anonymity needs, the PBoC is also planning to adopt a CBDC design that enables anonymous digital yuan transactions in small amounts, Mu reportedly claimed. “The digital renminbi adopts a design of small amounts anonymous, keeping large amounts traceable,” he said.

“In short, the protection of user privacy by digital renminbi is the highest among the current payment tools,” Mu concluded.

As previously reported by Cointelegraph, many global jurisdictions like the United States have considered user privacy issues as one of the biggest problems of a CBDC. According to the European Central Bank’s digital euro public consultation, user privacy is the top requested feature for a European CBDC, followed by security and pan-European reach.

China’s digital yuan will offer best privacy protection, says official

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