Ongoing regulatory gaps and offshore BTC sales raise transparency concerns as China expands its digital yuan ambitions.
The Governor of the People’s Bank of China (PBOC), Pan Gongsheng, recently voiced a strong push to make the e-CNY part of a more diverse global currency system — aka multipolar, according to Reuters.
This step is not just a formality, but is accompanied by a serious intention to reduce the world’s dependence on the US dollar, which so far seems to have “remote control” over international transactions.
Not just rhetoric, they will also build a special international operational center for the e-CNY in Shanghai. This is to encourage the use of digital yuan across borders and strengthen the infrastructure that supports it. But if you think this is just about technology and the financial system, wait a minute. There is a strong aroma of politics and economic strategy too.
On the other hand, China’s efforts to promote the e-CNY are in line with their criticism of the global payment system which is considered too “exploitable” politically. Unilateral sanctions from certain countries, for example, make Beijing increasingly want to create alternative global payments that are not subject to external pressure. Well, this is where the digital yuan appears as a “local answer” to global problems.
Furthermore, a collaborative project called “mBridge” was developed with Hong Kong, Thailand, UAE, and the Bank for International Settlements. This project will provide settlement of transactions between countries without the need for SWIFT, which is still very much dominated by the West. If successful, this could be a big stepping stone for e-CNY.
But of course, the road is not so smooth. The digital yuan is indeed sophisticated, but it still faces many obstacles. One of them is that the yuan is not yet completely freely convertible.
The financial system is still tightly controlled by the government. And about privacy? Many parties are still doubtful because e-CNY allows for real-time transaction tracking. Is this efficiency or excessive surveillance? It depends on which point of view you look at it from.
On the other hand, the CNF previously highlighted the issue of 15,000 BTC allegedly sold by the local Chinese government through an offshore company without national legal guidance. This situation has raised many eyebrows. Without clear regulations regarding confiscated crypto assets, the risk of misuse and lack of transparency is increasingly felt.
Not only that. There are also internal government discussions regarding the management of crypto assets resulting from crime, including Bitcoin.
Options that have emerged include recognition as property, the establishment of a national crypto reserve, and the possibility of involving the PBOC in management to make its direction and governance clearer. However, until now, the legal clarity is still unclear.
Funnily enough, at a time when China is suppressing the use of crypto and pushing for a closed system like e-CNY, three giant mining companies — Bitmain, Canaan, and MicroBT — are building production facilities in the United States.
This facility is to avoid import tariffs and reduce dependence on the domestic supply chain. But on the other hand, US national security is a topic of discussion in itself, because these companies are clearly from China.
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