China’s central bank digital currency, the digital Yuan or e-CNY, is well on its way for full implementation. The People’s Bank of China (PBoC) release a Whitepaper with details on their CBDCs for the first time since the project was made public.
As the document revealed, the digital Yuan is currently being tested after successfully completing its top-level design, function development, and system testing. The CBDC has been sending to citizens in “representative regions” and it’s yet to have an official launch date.
However, Chinese government officials have suggested a potential rollout date for the 2022 Beijing Winter Olympics. Thus, a group of U.S. Senators has issued a letter to the United States Olympic & Paralympic Committee’s Chairwoman Sussane Lyons to “forbid American athletes from receiving or using digital Yuan during” the sports event.
The letter was written by Senator Marsha Blackburn, Roger Wicker, and Cynthia Lummis, a well-known Bitcoin proponent. The Senators argued that China’s CBDC is “entirely” controlled by the PBOC.
Thus, the CBDC can be used to “tracked and traced” the athletes. The document released by the Chinese government claims that the digital currency will have “controllable anonymity” to protect users’ data and prevent potential massive scams, and other security risks.
However, the Senators mistrust the Chinese government and its central bank. They based their arguments on the aforementioned Whitepaper claiming that the digital Yuan gives China the capacity to “know the exact details of what someone purchased and where”.
China’s Digital Yuan, An Tool To Boost Innovation Or Spying?
A report by Sino Global Capital summarized some of the main key features of the digital Yuan and its main objective. The Chinese government wants to allegedly find a “balance” between the capacity to monitored transactions with its CBDC and prevent those deemed illicit.
China expects CBDC/e-CNY to be conducive to maintaining China’s monetary sovereignty and financial stability, as well as fostering integrity of the monetary system in the China pursuit of the digital economy.
The Senators dismissed this motive and claimed that the CBDCs is a surveillance tool of an “unprecedented scale”. The biggest danger for American athletes, the letter says, is the digital wallet required to spend the CBDC. Thus, Lummis and her colleagues add:
(China hopes that) they (the American Athletes) will maintain digital yuan wallets on their smartphones and continue to use it upon return. The integration of China’s digital currency into global commerce has many problematic privacy implications.
The letters quoted some precedents to strengthen the argument. Amongst them, the Senators claimed, is the utilization of social media and digital payment platform WeChat “already being used to surveil, threaten, and arrest Chinese citizens”.
The launch of the digital Yuan is imminent, other countries are working towards releasing their own CBDCs to counterbalance China’s. In the meantime, the U.S. seems uncertain about its relationship with digital assets and seems at risk of losing ground to other alternatives.
At the time of writing, Bitcoin (BTC) trades at $30,935 with a 3% loss in the daily chart.