China has announced plans for a governmental overhaul that includes the introduction of a new national financial regulator. On Tuesday, March 7, the government announced that it would abolish the China Banking and Insurance Regulatory Commission (CBIRC) and move its responsibilities to a brand new administration. This move is part of a broader reform agenda for party and state institutions in China that was called for by the country’s president, Xi Jinping.
The new financial regulator will “strengthen institutional supervision, supervision of behaviors and supervision of functions,” according to the plan. It will take over some functions of the central bank and securities regulator. The legislature is set to vote on the plan for institutional reform on Friday, March 10.
Currently, China’s financial industry is under the supervision of the People’s Bank of China (PBOC), the CBIRC, and the China Securities Regulatory Commission. There was no specific mention of reforms for the crypto industry in the announcement.
However, in February, an ex-adviser to the PBOC called upon regulators in Beijing to reconsider their harsh ban on crypto. In 2021, China banned nearly all crypto transactions, but the government has been spending millions developing its own central bank digital currency (CBDC), the digital yuan.
One of the most recent updates on the digital yuan project was the incorporation of new smart contract functionality and new use cases, including buying securities and offline payments. China also announced the establishment of the National Blockchain Technology Innovation Center in February, a state-supported institution that aims to speed up the country’s industry via blockchain technology.
The new regulatory framework is expected to improve oversight and streamline the financial sector in China. The consolidation of regulatory responsibilities into a single agency could also lead to greater efficiency and better coordination in regulating financial activities.
Overall, China’s governmental overhaul and the introduction of a new financial regulator signal the country’s commitment to strengthening its financial system and ensuring financial stability in the future.
Yi Gang, the Governor of the People’s Bank of China (PBoC) has reiterated that discussions on its Central Bank Digital Currency (CBDC) dubbed the Digital Yuan (e-CNY) are more centered on the privacy aspects of its operations to users.
Speaking at the Hong Kong Fintech Week, Yi said privacy protection is top on its list.
Coming off as one of the Central Banks with a vested interest in CBDCs, the PBoC said its e-CNY is mostly focused on retail domestic transactions as a major complement to cash in the digital world. It said in a bid to protect consumer privacy, that it has employed a 2-tier system.
In the first tier, Yi Gang acknowledged that the PBoC facilitates inter-institutional transfers with banks under its jurisdiction. At this stage, no customer information is collected. In tier 2, the banks distribute the e-CNY directly to consumers but obtain only the information that will enable them to stand right by the law.
Yi Gang noted that no entity will be able to probe a transaction without any rigorous legal permission, granting most users the safety they need to embrace the e-CNY.
“The PBOC ensures personal information security through advanced technology and strict management, with full adherence to consumer privacy protection laws and regulations. Transaction-related data is encrypted for storage,” Yi Gang said in the speech further assuring that “Sensitive consumer information is de-identified to non-transacting parties. Entities and individuals are prohibited from arbitrary inquiry or information usage without rigorous legal authorization.”
China comes off as the world’s most advanced economy with a functional CBDC in circulation. While the digital legal tender has not been officially launched for everyone in the country to use yet, its retail pilot tests have been robust, with a presence in top cities including Suzhou, and Shenzhen amongst others.
Yi Gang said the PBoC has an active collaboration with the Hong Kong Monetary Authority (HKMA) as regards CBDC interrelationship and he said the bank is interested in creating other such relationships with other Central Banks around the world.
The Digital Yuan (e-CNY), China’s Central Bank Digital Currency (CBDC) is growing at a fast pace as data released by Zou Lan, director of the PBoC financial markets department revealed the new legal tender has inked a total of 87.57 billion yuan ($13.68 billion) in transactions since public trials began, according to CNBC.
The performance figures released by the PBoC also showed that the total number of citizens that are now using the digital yuan has topped 261 million per a CNBC report. This user count is arguably favoured by the hosting of a newly released Digital Yuan wallet by the Chinese Central Bank on both the Google Play Store and the Apple App Store respectively.
While the transactions figures come off as impressive, it is by no means close to those of Alipay, one of the two dominant payment service providers operating in China. While the total transaction value of the e-CNY is pegged at 87.57 billion yuan, Alipay reported an average of 10 trillion yuan per month for the 2020 financial year.
Additionally, the monthly active users of Alipay pegged at 711 million people dwarfs the 261 million reported by the PBoC, and registered businesses on Alipay are over 80 million while businesses with a digital yuan wallet are just shy of 10 million.
While the fraction of the government’s new money made should be acknowledged, it is still a mile away from matching with local payment service providers. While competition from private cryptocurrencies like Bitcoin as well as stablecoins are already waded off when the country banned cryptocurrencies last year, the PBoC needs a more dogged strategy to onboard more users to use the e-CNY.
China has come a long way in perfecting the technical details surrounding its Digital Yuan currency, and with plans to permit foreign athletes to use the new money at the forthcoming Beijing Olympics, the PBoC wants to ensure all loose ends are tied with respect to its retail testing campaign.
The Digital Yuan (e-CNY), China’s Central Bank Digital Currency (CBDC) is growing at a fast pace as data released by Zou Lan, director of the PBoC financial markets department revealed the new legal tender has inked a total of 87.57 billion yuan ($13.68 billion) in transactions since public trials began, according to CNBC.
The performance figures released by the PBoC also showed that the total number of citizens that are now using the digital yuan has topped 261 million per a CNBC report. This user count is arguably favoured by the hosting of a newly released Digital Yuan wallet by the Chinese Central Bank on both the Google Play Store and the Apple App Store respectively.
While the transactions figures come off as impressive, it is by no means close to those of Alipay, one of the two dominant payment service providers operating in China. While the total transaction value of the e-CNY is pegged at 87.57 billion yuan, Alipay reported an average of 10 trillion yuan per month for the 2020 financial year.
Additionally, the monthly active users of Alipay pegged at 711 million people dwarfs the 261 million reported by the PBoC, and registered businesses on Alipay are over 80 million while businesses with a digital yuan wallet are just shy of 10 million.
While the fraction of the government’s new money made should be acknowledged, it is still a mile away from matching with local payment service providers. While competition from private cryptocurrencies like Bitcoin as well as stablecoins are already waded off when the country banned cryptocurrencies last year, the PBoC needs a more dogged strategy to onboard more users to use the e-CNY.
China has come a long way in perfecting the technical details surrounding its Digital Yuan currency, and with plans to permit foreign athletes to use the new money at the forthcoming Beijing Olympics, the PBoC wants to ensure all loose ends are tied with respect to its retail testing campaign.
The People’s Bank of China (PBoC) has extended its pilot tests for the country’s Central Bank Digital Currency (CBDC) or digital Yuan to launch a new mobile wallet.
As reported by Reuters Tuesday, the new wallet is available to a select few as it is still in the experimental or research and development phase.
The new mobile wallet is notably available on the Google Play Store and the Chinese-supported App Store for iOS users.
The People’s Bank of China’s (PBOC) digital currency research institute developed the pilot mobile wallet and will be operable in the Shanghai region. The mobile test wallet is a step forward in China’s pursuit of a CBDC that will complement the Yuan fiat currency.
Previously, Chinese regulators reportedly will conduct a trial test of digital Yuan. Macau could be one of the options for testing digital Yuan, as the city enjoys the advantage of the casino industry, although the COVID-19 pandemic is still continuing to crush its sector.
The Governor of the People’s Bank of China, Yi Gang, revealed back in November that the apex bank will not slow down its pace of development for the Digital Yuan project. He noted that the focus of the CBDC is to improve the design and usage of the new form of money while also bolstering its operational integration with existing payment systems.
China’s efforts with respect to developing a CBDC have been well commended in the past years. The PBoC launched trials for the Digital Yuan back in 2020 and has conducted a number of transactions to showcase the efficacy of the CBDC in retail transactions. As of November 2020, Governor Yi confirmed that the PBoC had recorded more than $300 million in Digital Yuan transactions.
At present, the Chinese government has succeeded in taming all forms of competition that may arise from privately issued digital currencies as it successfully banned crypto last year. The only competitors that are visible for the PBoC to compete with are the established payment service providers, including WeChat and Alipay, both of which currently dominate the digital payments ecosystem in the country.
China appears not to be in so much hurry concerning the Digital Yuan pursuit and has not mentioned a date when the new form of money will be rolled out.
One of 2021’s biggest stories was the China ban on Bitcoin mining. On one hand, the news affected Bitcoin’s price and gave ammunition to the nay-sayers that think that governments will outlaw Bitcoin. On the other, the network kept working without a hiccup,recovered its hashratein record time, and gained in decentralization. However, a question remained. Why did China exclude itself from this very lucrative activity in which they were dominating?
As Bitcoin entrepreneur John Carvalho not-so-eloquently put it, “I refuse to believe that China is stupid.” There has to be a reason, even if it’s a simple one. To help our audience solve the puzzle, NewsBTC decided to gather all of our theories in a single post.
China Ban Theory #1: The Digital Yuan CBDC
This one is as straightforward as it gets. WhenChina started cracking down on miners, NewsBTC reported: “As for the possible reasons, Bitcoin Magazine’s Lucas Nuzzi cites the upcoming Digital Yuan CBDC.” And Nuzzi said, “They’re literally rolling out their own coin (a CBDC) that will enable the mass surveillance and unbanking of dissidents.”
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!
1/ The CCP officially banning #Bitcoin should come as no surprise.
They’re literally rolling out their own coin (a CBDC) that will enable the mass surveillance and unbanking of dissidents.#Bitcoin is at complete odds with that. Dictatorships don’t like freedom money.
— Lucas Nuzzi (@LucasNuzzi) June 21, 2021
So, did China kill a potential billion-dollar industry just to squash their CBDC’s competition? Is that it?
China Ban Theory #2: Blackouts
Is China having energy issues? Inthat same article, we posed another theory:
Get 110 USDT Futures Bonus for FREE!
“In retrospect, we should’ve seen it coming. Only two months ago, following a suspicious blackout,NewsBTC reported:
According to the Beijing Economic and Information Bureau, there were concerns about the energy consumption related to these activities. PengPai quotes Yu Jianing, rotating Chairman of the Blockchain Special Committee of China, to claim that thecountry’s environmental requirements could lead to crypto mining being more “strictly regulated”. Jianing said this will be “inevitable.”
However, would they be decommissioning small hydropower stations if this was the case?
China Ban Theory #3: Cleaner Energy Sources
Our report on small hydropower stations’ source was government-regulated media, so take it with a grain of salt. It starts with a claim that clashes heavily with theory #2:
“According to the article, the heyday of private power plants in China was the beginning of the century. Investors built thousands of hydropower stations because they saw them as a constant cash cow. For their part, the regions nearby saw them as a sign of progress and a solution to their energy problems.
However, with the gradual surplus of electricity in China in recent years, the electricity generated by hydropower stations is often destined to being abandoned (commonly known as “abandonment of electricity”)”
However, the main reason for the decommissioning seemed to be repairing the original flow of the rivers. “Hydropower stations have always been one of the important factors restricting the ecology of Sichuan’s rivers,” said Wang Hua, deputy director of the Sichuan Provincial Water Resources Department. We went a step further:
“It’s possible that the government is trying to get rid of those plants. That would explain the article’s tone, it seems like it was trying to get investors to stay away from those hydropower stations. In light of this, China’s ban on Bitcoin mining could just be part of an even bigger play. They’re serious and methodically shaking things up over there.
What could be their end-game? Is China just trying to go carbon neutral and repair the original flow of the rivers? Or is there something else at play here?”
However, something doesn’t add up. Inanother article about the ban, we highlighted that hydropower energy is clean energy.
“Did China make the mistake of a lifetime by banning Bitcoin mining or do they have a secret plan?
The fact that the electricity for crypto mining in Sichuan came from clean hydropower meant that many thought the province would be a safe haven for Bitcoin miners.”
China Ban Theory #4: The New China Model
Weexplored Bloomberg’s theoryabout a “less founder-driven and more China-centric” model that China was supposedly exploring.
“If China is abandoning the Silicon Valley model, what will it replace it with? Insiders suggest it will be less founder-driven and more China-centric.
Why is China dwarfing its biggest industries and players? Is the “China Model” just concerned with scale? Or is control their focus? Are they cracking down on people and companies with too much power that work on a global scale?”
And even though it wasn’t quite believable, it introduced the concept that China was also cracking down on their biggest tech executives. Maybe this isn’t only about Bitcoin?
BTC price chart on Bitbay | Source: BTC/USD on TradingView.com
China Ban Theory #5: Making Bitcoin Hard To Use
This one doesn’t explain the overarching theme of the China ban. It does add color to whatever theory you prefer. In an event, Yin Youping, Deputy Director of the Financial Consumer Rights Protection Bureau of the People’s Bank of China, said, “We remind the people once again that virtual currencies such as Bitcoin are not legal tender and have no actual value support.” And proceeded to list everything the PBOC was doing to combat cryptocurrency trading.
In theNewsBTC report about it, we said:
“Maybe their plan is simpler than we thought. It’s possible that The People’s Bank of China is just going to make it really really hard for the common citizen to access Bitcoin. And, China’ll use propaganda and repetition to keep people in check and scared of the unknown. One of Bitcoin’s prototipical adversarial scenarios. A battle that Bitcoin expected sooner or later.”
China Ban Theory #6: Preparing For Evergrande’s Default
Was the Chinese government just closing the exits? They knew thatthe Evergrande situation was inevitableand didn’t want people to have the Bitcoin lifeboat available. In our report, we said:
“To recap: the government saw this coming from a distance. They knew the crisis was going to repeatedly hit the country and banned Bitcoin mining to scare the population into not buying the hardest asset ever created. Bitcoin, the true hedge against the collapse of every economy.”
China Ban Theory #7: FUD To Get More Bitcoin
According toJohn Carvalho’s wild and full of assumptions theory, China bans something related to Bitcoin every cycle to manipulate the price and get more BTC. The country has no incentive to ban the industry. They make too much money mining, plus they control the ASICs manufacturers, plus mining machines inflate the value of chips, and they control that business too. So, Carvalho’s theory is:
“The main ASIC manufacturer, the Chinese company Bitmain, had a new generation of miners ready. So, the CCP “decided to create a demand for the aftermaket and combine it with the FUD.” As they usually do, they sold their Bitcoin and made their shorts. Then, China banned Bitcoin mining and the whole country turned off the ASICs. The world perceived the ban as real, just “look at the hashrate.” This is the first time this happens. Then, China sold a small portion of its ASICs to the USA.”
According to him, Bitcoin mining in China didn’t stop, they’re just not signing the blocks. Of course, he doesn’t have any proof, and neither do we. This is just a theory, like all the others.
What’s really going on in China? What’s the reason behind the great China ban of 2021? We wouldn’t know for sure, but we have many suspicions. Let’s hope 2022 gives us solid evidence, new insights, or, at least, a plausible explanation.
Featured Image by PublicDomainPictures on Pixabay | Charts by TradingView
Shanghai, China’s most crowded city, is looking for ways to use metaverse in public services over the next five years.
Shanghai Municipal Commission of Economy and Information Technology’s five-year development plan for the electronic information industry listed four frontiers for exploration, and one of them is metaverse.
According to a CNBC report, the paper called for promoting the metaverse’s use in public services, business offices, social leisure, industrial manufacturing, production safety, and electronic games. The commission plans to encourage further study and development of underlying technologies, such as sensors, real-time interactions and blockchain technology.
China’s interest in new technology has been unwavering in recent years. China’s efforts to establish a central bank digital currency (CBDC) and its use of digital biometric hardware wallets for the virtual yuan have cemented it as a leader in the issuance of a CBDC.
In March, China’s State Council released its 5-year development plan that included many of these same fronts for exploration. As reported by Cointelegraph, the term “blockchain” was used for the first time in China’s 14th five-year plan, a document that outlines the country’s economic goals for the next five years, which runs from 2021 through 2025.
Related:Chinese companies embark on a metaverse trademark race
The metaverse has become an area of interest for many major companies in recent months. In October, Facebook changed its name to Meta in order to bank on the popularity of the term metaverse.
Despite the People’s Bank of China’s (PBOC) warning on metaverse and nonfungible tokens (NFTs) in November, over 1,000 Chinese businesses have filed tens of thousands of trademark applications that reference the term. More than 1,360 Chinese businesses have applied for 8,534 trademarks, according to the South China Morning Post.
Chinese companies are in the process of developing metaverse technologies, with Baidu, Tencent, and Alibaba among those aggressively working on related projects. Last week, Baidu debuted its XiRang metaverse app, which will fully launch in six years.
China’s crackdown on crypto is expanding into the metaverse and nonfungible tokens (NFTs), an executive at the People’s Bank of China (PBoC) recently implied.
Speaking at a national financial security summit, Gou Wenjun, the director of the Anti-Money Laundering (AML) unit at the PBoC, pointed to the risks associated with leaving the new trends of the crypto ecosystem like NFTs and metaverse unregulated. He claimed that, while people would use said virtual assets for privacy and wealth appreciation, they are also prone to be used for illicit purposes like money laundering and tax evasion.
The fast-paced innovation of the crypto world requires higher requirements in terms of risk supervision and governance, said the AML head, adding that the isolated nature of crypto, NFT and metaverse-based items from the real world can be used as a money-laundering tool.
Suggesting an objective look at the evolution of virtual assets and the development of underlying technologies, Gou proposed to “clarify the division of supervisory responsibilities, improve the transparency of virtual assets, and explore the use of supervisory sandboxes to study and judge the essence and nature of virtual assets.”
As the second step, Gou said China should strengthen the monitoring and analysis of virtual asset transactions. Banks and payment services that provide fiat-to-crypto gateways should authenticate senders and receivers with real names while improving the ability to identify suspicious transactions, he proposed.
Related:Crypto’s impact on sanctions: Are regulators’ concerns justified?
The PBoC official suggested improving the application of new technologies and establishing a virtual asset transaction traceability and scene tracking system. Said system would apply artificial intelligence, machine learning and other technologies to label accounts that transact with probed addresses.
Lastly, Gou is open to improving cooperation between financial intelligence agencies worldwide to form an international joint force to fight crypto-related crimes. “The Anti-Money Laundering Center will continue to deepen information sharing and co-investigation cooperation with 60 overseas financial intelligence agencies,” he added.
During a virtual video session at the Bank of Finland Institute for Emerging Economies’ 30th Anniversary Conference, People’s Bank of China governor Gang Yi discussed recent developments regarding the country’s central bank digital currency, or CBDC, known as the digital yuan (e-CNY). Gang specifically addressed the issue of privacy surrounding the Digital Yuan in the following statement, as translated by Cointelegraph:
We are taking a high degree of focus on issues surrounding the security of personal information and the digital yuan and have made relevant regulatory and technological adjustments to meet this objective. We have adopted a principle of anonymity for small transactions regarding the digital yuan and will only step in to regulate under the law for large transactions. When it comes to collecting personal data, we seek only to collect what is necessary and the minimum of what is legally required, which is far less than electronic payment apps of today.
Gang spoke on the storage and utilization of personal information belonging to users of the technology adding:
At the same time, we seek to control the storage and use of personal information strictly. Unless the law demands it, the PBoC will not hand over such information [on e-CNY users] to any third-party or government agency. In recent years, China has passed multiple laws to facilitate the safety and protection of personal data from a regulatory standpoint.
In recent months, the number of people with e-CNY accounts has ballooned to over 140 million. At the same time, its transaction volume surpassed 62 billion yuan ($9.7 billion) in October. When discussing the next steps forward for the CBDC, Gang explained that while the e-CNY remains confined mainly to consumer spending in China’s retail sector, there are plans for cross-border expansion:
The PBoC wishes to cooperate with central banks, international agencies, and cryptocurrency entities across the globe. We have already launched an mCBDC Bridge with the Bank for International Settlements, The Bank of Thailand, the Central Bank of the United Arab Emirates, and the Hong Kong Monetary Authority. We have also begun technical discussions with the European Central Bank regarding the design of CBDCs.
