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China’s Central Bank Addresses Digital Yuan Privacy Concerns

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

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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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China’s Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

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China's Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

According to the latest announcement, Beijing and Shanghai, which are the biggest cities in China, are planning to hold pilots to promote CBDC (Central Bank Digital Currency) this year.

According to a Global Times report, this effort would lead to a positive start and could pave the way for the digital currency’s official launch.

CBDCs are controlled by the country’s central bank directly, thus helpful in storing value and making digital payments seamlessly. CBDCs can be considered as a digital form of sovereign money that is backed by national credit and government power.

Wider Efforts to Promote the Digital Currency

As a part of this announcement, Beijing Mayor Chen Jining announced that the capital would stimulate the building of demonstration zones for fintech and professional services this year.

Shanghai Mayor Gong Zheng also expressed his views regarding the development of CBDC and stated that the Shanghai city will continue to maintain financial opening-up and encourage the digital currency. 

Also, the governor of South China’s Guangdong Province, Ma Xingrui, confirmed that authorities will assist Shenzhen’s development into a pilot zone for the country’s digital currency. 

A report also highlights the views of one of the Shenzhen-based veteran industry insiders. According to him, the pilot testing is just an initial innovative step. Once launched, the digital yuan will transform the financial sector and unleash an encouraging digital finance service sector worth billions of yuan. 

Chinese Cities Continues to Plan Large-Scale Tests of Digital Currency

CBDC can minimize dependence on banks and other financial institutions and facilitate financial inclusion for the underprivileged population. Since 2020, DCEP’s (Digital Currency Electronic Payment) trial operation has increased from small-scale closed-loop testing to large-scale open testing. 

The tests were carried out in various cities of China, including Shenzhen, Shanghai, Suzhou, Chengdu, along with others.

Recently an announcement was made stating that Shenzhen city will stage another public trial of the central bank’s in-the-works digital currency. According to the reports, this is the third time the city will hold one of the “red envelope” giveaways, distributing 20 million digital yuan through a random draw.

Suzhou city also held a similar trial in the month of December 2020, giving out 20 million digital yuan.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.  

China’s Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

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Crypto and blockchain: What the Brazilian market can expect for 2021

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2020 will be remembered as one of the most difficult years for contemporary societies: Countries and entire populations have faced lockdowns and economic crises, financial markets still suffer from the severe impacts of the economic recession, and more than 2 million lives have been taken by COVID-19.

Despite this, other sectors have been impacted in other ways during the severe global health crisis — which still seems far from over, even though vaccines are beginning to be distributed in wealthy countries. Economies have radically digitalized, hedge assets have attracted mistrust, and the crypto market has had one of its most important years since 2009, the year of Bitcoin’s (BTC) launch.

In fact, the crypto and blockchain markets have stood out in the face of a crisis that has spared almost no sector. Cryptocurrency funds are among the most profitable of the year, Bitcoin and the biggest altcoins reach new historic highs, large institutions and investors in the financial markets have allocated investments in Bitcoin, and blockchain technology has broken down barriers in the financial sector and in the production chains of the most varied of sectors.

Faced with a year of profound changes, what is to be expected for the future? Cointelegraph Brasil invited some of the country’s top crypto and blockchain experts to chart the next steps for the market.

Institutional investment

Institutional investment was highlighted in 2020, finally reaching the cryptosphere, and it promises another year of growth in 2021.

According to Rodrigo Borges, founding member of the Oxford Blockchain Foundation, large Bitcoin contributions by institutional investors — which have even bought more BTC than the production capacity of miners — will intensify in 2021: “Regarding Bitcoin, I imagine that there will be an increase in demand for institutional investors, enabling the emergence of new products with exposure to Bitcoin,” analyzed Borges. He also sees “2021 as a year of consolidation and strong development in the sector.”

As for Tatiana Revoredo, MIT blockchain expert and Cointelegraph Brasil columnist, the custody of cryptocurrencies by traditional financial institutions and the adoption of stablecoins will be key in the new year:

“In the financial sector, we will see applications for custody of crypto assets being launched in Brazil, with the possible participation of the traditional market. And if the regulatory authorities allow it, stablecoins will have an expressive role in the Brazilian market, with the turnover being able to quadruple in size.”

Crypto markets

Crypto markets experienced a year of extreme optimism — or greed, as demonstrated by the Crypto Fear & Greed Index. Bitcoin reached a dramatic bottom close at $3,800 in March, and it beat its 2017 historic high of $20,000 on Dec. 16. In Brazil, the currency set a new historical record in November when it reached $106,000 Brazillian reals.

Cointelegraph Markets reporter Marcel Pechman highlighted the behavior of the market despite the setbacks suffered during the year. He recalled: “The Bitcoin and Ethereum markets developed in 2020 as never before imagined, both in terms of trading volume, price and the contribution of renowned investors like Paul Tudor Jones and Stanley Druckenmiller.”

Pechman said that despite the crypto market suffering some setbacks, the impact of those setbacks on market performance was not so significant: “We had, for example, the US Department of Justice suing BitMEX — at the time, the largest derivatives exchange — and KuCoin’s $280 million hack, and none of those affected the market.”

Pechman also recalled that the 2020 DeFi race led to expensive transaction costs on the Ethereum network but did not impact market sentiment.

OriginalMy CEO Edilson Osório agreed with the promising future of the DeFi sector, but he cautioned against fraud:

“This is an experimental and very promising market, but it must be given extra attention because of malicious groups applying scams and fraud in general. As it is a very new market, platforms may have problems with hacks, and due to the great centralization that exists (even with many platforms presenting themselves as decentralized), there is still a risk of exit scams.”

About 2020’s innovations, and the digitalization imposed by the COVID-19 crisis, Pechman also said that it will go even deeper in 2021:

“Successive innovations, which include Taproot, Schnorr and Lightning Network in Bitcoin, in addition to the launch of Ethereum 2.0 phase 0, pave the way for the next wave, with increasingly larger, scalable applications, and interconnected with traditional finance. The final proof? Fidelity offers loans covered in cryptocurrencies.”

On the domestic markets, Osório is betting on the tokenization market in Brazil, which is already used by the country’s largest crypto exchange, Mercado Bitcoin. According to him, 2021 will be a year for “maturing the security tokens market.”

“Existing protocols are beginning to be well regarded by regulators, since most of them provide for greater participation and visibility on the part of the regulator itself and allow the mitigation of various risks inherent in this market. In this race, there is a great chance that Brazil will gain prominence because the local regulator has established a regulatory sandbox and the first projects are already beginning to mobilize to have their applications running in a more legally secure environment,” – noted Osório.

Another player at the Brazilian crypto markets, João Paulo Mayall — head of operations at QR Asset Management — is also optimistic about the tokenization market in 2021. He highlighted the role of regulators in the sector’s expansion in the South American country: “I believe that the future is the tokenization of assets, debentures, court bonds, government debts. Brazil is very advanced in its banking system and we will have many surprises in this sector, so I am very optimistic. Tokenization is a billion-dollar market, but it lacks the infrastructure. Innovation came in front of the regulators, but I think they are open to listening and working on it. I think [the regulation] will happen next year, even before March 2021.”

Finally, blockchain expert Tatiana Revoredo argued that crypto adoption in Brazil, which saw its currency melt in 2020, will intensify, with Bitcoin once again asserting itself as an economic-protection asset. She believes that the crypto markets will see “an increase in the interest of Brazilians, with consequent increase in the Brazilian market, with a prominent role for Bitcoin being adopted as a protective asset.”

CBDCs and national governments

The digitization of economies has placed the discussion of central bank digital currencies, or CBDCs, at the center of debates by financial authorities around the world. One of the countries that has definitely entered this race is China, which is already conducting real tests of the digital yuan in the country. Its main geopolitical rival, the U.S., announced that for the time being, it does not intend to digitize the dollar, but it is already seeing internal pressure from not following the Chinese leadership in the sector.

The Central Bank of Brazil has also commented on the transformation of the Brazillian real into a digital currency a few times, although there are no concrete plans for that in the short term.

Osório believes the European Union will join the hype soon, further accelerating the global race for CBDCs: “Although China appears to be leading the CBDC race, other countries are also beginning to move in this direction. Among them, Estonia, which recently started an internal consultation for the launch of its currency in the digital version. In particular, I believe that in Europe a more comprehensive and organized movement should take place in this sense, given the incentives promoted by the European Union.”

Many experts try to predict the impacts of CBDCs on economies — one of the main concerns of economic regulators. Governments, which largely study the adoption of blockchain in their public processes, should also enter the debate on privacy and the digitization of money.

According to Tatiana Revoredo, “in the government sector, the forecast is for the growth of [blockchain] applications in document registration and health applications, as well as a greater concern, by the citizens, regarding the relationship between privacy and CBDC.” She also claims that payments processors should closely monitor this innovation:

“Those who should be more attentive to these movements are the means of payment, such as PayPal and their peers. They will have to look deeply into their business models as soon as governments start issuing their currencies digitally. ”

Blockchain adoption

Governments have also viewed blockchain technology through a positive lens. In Brazil and Latin America, several state entities already use the technology to certify documents, including customs and notary offices. Big companies are also adopting blockchain to certify production, with use cases that are only expected to grow going forward.

Borges said that the acceleration of blockchain adoption by large companies and governments can positively impact crypto assets:

“Within the scope of blockchain technology, I see the development of interesting solutions, with the increasing involvement of traditional players, especially in the financial and agribusiness sectors, which may result in increased liquidity for certain assets.”

Revoredo agreed and highlighted the advancement of technology in the agricultural sector: “There has been a significant advance in agribusiness, with use in the identification of devices (drones, for example), integration with IoT and artificial intelligence to provide greater reliability and certify quality of agricultural production.”

Osório defended the growth of the blockchain market in 2020 and its prospects for the near future: “When we look at advances in blockchain with applications beyond digital currency, we see a growing market in the area of ​​decentralized digital identity, including with the approach of governments. We have seen movements in governments in the US and Japan, interested in modernizing their digital governance models. And the pandemic has certainly helped to accelerate and advance discussions on the issue around the world, as it understands that the digitization of analog and traditional services is a necessity.”

The end of 2020 was a milestone that closed out one of the most dramatic years in the history of contemporary societies, but it also revealed ways to combat global economic and health crises.

Blockchain technology has helped societies fight corruption, adopt more transparent processes and even contributed to the certification of medicines and vaccines during the most serious health crisis of the last 100 years, in addition to helping companies to improve procedures, products and services.

Meanwhile, Bitcoin has strengthened as an economic protection and investment product, has attracted institutional investment giants, and — together with other crypto technologies — has even laid the foundation for central banks around the world to start implementing their own digital currencies.

We still do not know the depth of the revolution we are experiencing with the digitalization of societies and the weakening of national currencies around the world, but by the end of 2021, we will certainly know many of the answers to the questions that still plague us at the beginning of this new year.

Crypto and blockchain: What the Brazilian market can expect for 2021

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China’s central bank lays regulatory foundation for CBDC

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China’s central bank, the People’s Bank of China (PBOC), published a draft law this Friday that aims to provide regulatory framework and legitimacy for a forthcoming central bank digital currency (CBDC), the digital yuan. 

The draft law states that the yuan is the official currency of the People’s Republic of China whether in physical or digital form.

The draft law also appears to take aim at third-party efforts at yuan-backed digital currencies, stating that individuals and institutions are prohibited from making and issuing a currency designed to “replace” digital yuan circulation. This move would presumably criminalize all non-state-sanctioned yuan-backed stablecoins. 

The punitive measures against violators of this proposed law are harsh: most notably confiscating all profits, destroying all tokens, and imposing a fine of not less than five times the illegal amount created, in addition to the possibility of criminal prosecution and imprisonment.

The People’s Bank of China clarified that the draft of the new law is on the table for public consultation until November 23, 2020.

Previous reports have indicated that China hopes to start officially issuing the digital yuan before the Winter Olympics in Beijing in February 2022. Additionally, earlier this month, China conducted a major test of Shenzhen’s digital yuan payment system, where nearly 47,500 residents claimed 200 yuan ($30) each in digital currency which they then spent across 3,389 stores throughout the city.

This regulatory move is also just the latest in a worldwide trend towards CBDCs. The Bank for International Settlements had told Cointelegraph that it had worked with seven central banks to define the foundational principles necessary for any publicly available CBDCs to help central banks meet their public policy objectives.

China\’s central bank lays regulatory foundation for CBDC

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Blockchain Service Network to Encourage the Development of China’s CBDC Plans

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According to the recent announcement, the China government is ambitious to launch a Central Bank Digital Currency (CBDC) to “dominate the digital commerce landscape and make the economy future-ready.”

Since a long, the Chinese government has never considered cryptocurrencies as a legal tender, but with the revolution of technology, industry players believe the Blockchain Service Network(BSN) that aims to support Blockchain SMEs to advance in the crypto space, can stimulate the development of virtual currencies like a CBDC. 

BSN’s Interoperability Infrastructure to Advance Crypto Space

BSN that was launched in April 2020, is the Chinese government-backed Blockchain initiative to support Blockchain SMEs to advance in the crypto space. BSN is an information infrastructure where all users share the same public services and integrate public Blockchains, including Ethereum, Tezos, NEO, Nervos, EOS, and IRISnet. 

In July, it was announced that governance of the BSN was divided into two ecosystems to make the network more secure, economically stable, and regulatory compliant. The two divisions were named as BSN China and BSN International.
Eden Dhaliwal, Global Managing Director at Conflux Network, believes that “this two-tiered ecosystem ensures capital and asset flow across chains and countries without compromising on the trustworthiness of the network.”

BSN Needs to Integrate Public Chains for Mass Adoption

BSN intends to support medium-sized businesses in building and deploying Blockchain applications. 


Eden Dhaliwal believes that China’s nationwide Blockchain project, the Blockchain Service Network, needs to integrate public chains to create interoperability, innovation, and internationalization of digital assets. In his words, 


“As one of BSN’s key mandates is to advance the Blockchain ecosystem in China, implementing private chain solutions enables a focus on limited enterprise and government use cases.”


According to Dhaliwal, by integrating various multiple public chains, there are ample chances for innovative financial instruments and digital ventures that would integrate seamlessly with the CBDC.

China Continues to stimulate the Development of Virtual Currencies Like a CBDC 

In August, Yifan He, CEO of Red Date Technology, announced that BSN would soon start integrating stablecoins that will be used as payment for various services on the BSN ecosystem. But for now, it is not yet decided which stablecoins will be incorporated. China’s Commerce Ministry mentioned that it would expand the trials of the nation’s CBDC to include Beijing, Tianjin, and Hebei provinces as well. 

It was also announced that state-owned commercial banks in China are conducting large-scale internal testing of a wallet for the country’s forthcoming digital yuan.

 To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.

Blockchain Service Network to Encourage the Development of China’s CBDC Plans

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