Digital yuan app adds prepaid Mastercard Visa top-ups for tourists

September 25, 2023 Coin Telegraph

China

The e-CNY app now allows tourists to top-up their wallets using Mastercard and Visa payments with a “recharge first and use later” option.

Tourists planning to visit the People’s Republic of China can now pre-charge their digital yuan wallets using Visa and Mastercard payment options as the nation continues to update the mobile app powering its central bank digital currency (CBDC) pilot.

The e-CNY app, which is still in its pilot version, is available to iOS and China-based Google Play Store users. The application serves individual users, allowing them to open digital yuan wallets to use e-CNY.

As per the latest iOS app update published on Sept. 22, version 1.1.1 supports its top-up service with international card options.

*The latest version of e-CNY app on the Apple App Store introduces the top-up service for international cards. Source: e-CNY app*

According to a number of local Chinese news outlets, the latest version of the e-CNY app coincides with the start of the Asian Games.

*A tutorial for foreign users outlining the process of signing up using an international number. Source: e-CNY app.*

China has extensively trialed using the digital yuan as a payment option for foreigners visiting the country. According to Yicai, the Beijing Winter Olympics in 2022 marked the beginning of the CBDC pilot being open for tourists as a means to transact with local merchants using e-CNY.

Inbound tourists are reportedly able to make use of overseas mobile numbers to register and open e-CNY wallets and make use of the recharge wallet feature, which now supports Visa and Mastercard payments.

As Cointelegraph recently reported, China is making moves to ensure that the digital yuan is available as a payment option for all retail payment scenarios. This would make the digital yuan a ubiquitous payment method in China between retail users and merchants.

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China’s digital yuan nears 0B transaction volume: Central bank governor

Bank of China Hong Kong

While the adoption and use cases of China’s e-CNY are expanding, the digital yuan still only represents 0.16% of China’s monetary supply.

Nearly $250 billion worth of transactions have taken place using China’s digital yuan in the one-and-a-half years since the start of its pilot, the country’s central bank governor has claimed.

On July 19, People’s Bank of China governor Yi Gang spoke at a conference in Singapore and said its central bank digital currency transacted 1.8 trillion yuan as of the end of June.

Yi added there have been around 950 million transactions from roughly 120 million wallets since the e-CNY’s initial January 2022 rollout lending to an average transaction amount of about $260.

MAS is honoured to have Dr Yi Gang, President of China Society for Finance and Banking as the speaker for the MAS Lecture 2023. Dr Yi spoke on “CBDC from China’s perspective”.

Find out more here: https://t.co/UbikjgQhRn pic.twitter.com/UuQwOQe8n0
— MAS (@MAS_sg) July 19, 2023

He claimed around $2.3 billion, or 16.5 billion e-CNY, was in circulation at the end of June, which only represents 0.16% of China’s monetary supply, according to a July 19 Reuters report.

The digital yuan’s adoption is still minimal relative to China’s 1.4 billion strong population, so far, the e-CNY had mostly been used for domestic retail payments aside from a few trials in Hong Kong.

On July 18, the South China Morning Post (SCMP) reported the Bank of China Hong Kong began trialing another cross-border payment scheme for Bank of China customers at select retail stores in Hong Kong.

The trial was rolled out in a bid to further promote the cross-border applications of e-CNY and is the third cross-border trial of the digital yuan in Hong Kong, according to the SCMP.

In a trial last year the BOCHK launched a program that encouraged customers to set up a BOC e-CNY wallet to receive $14 (100 yuan) to be used at the Hong Kong supermarket chain U Select.

In January, the central bank integrated smart contract functionality into the digital yuan to expand upon its use cases.

The $250 billion in e-CNY transactions is an over 70% increase from the number the bank cited in August 2022.

The amount is still, however, far off the amount of value processed by some of the largest public blockchains in the world.

Bitcoin (BTC), for example, processed $8.2 trillion in 2022, according to various reports.

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Belt and Road Initiative

The Coinbase CEO has been hugely critical of the U.S. failure to provide the crypto industry with regulatory clarity and has long argued it will push firms offshore.

“Adversary nations” like China could ultimately benefit from restrictive crypto policies in the United States, warns Coinbase CEO Brian Armstrong.

In a May 30 op-ed for MarketWatch, Armstrong again warned that while recent turbulence in crypto markets might tempt U.S. policymakers “to write it off as an unstable asset class,” doing so could see the U.S. cede its status as a financial leader and innovation hub.

In today's @MarketWatch I'm sharing an op-ed encouraging policymakers to see the big picture with crypto. It's important for American technology leadership and national security that this industry be built (at least in part) in America. https://t.co/I1702aHDGf
— Brian Armstrong ️ (@brian_armstrong) May 30, 2023

Armstrong urged policymakers to see that crypto is “about much more than individual transactions,” but represents a “transformative technology” that can revolutionize a variety of sectors — highlighting its ability to provide creators with royalties for secondary market transactions as an example and adding:

“Crypto, like the internet before it, has the potential to modernize finance and numerous other sectors, from supply chains to social media, by offering a faster, cheaper, more private, and accessible platform.”

Through his status as a public figure and head of Coinbase, Armstrong has long been pushing for U.S. policymakers to provide the crypto industry with regulatory clarity that can help realize crypto’s potential whilst protecting consumers.

Coinbase has continued to ask for clarity from the U.S. Securities and Exchange Commission around which digital assets qualify as securities and has argued against the agency’s “regulation by enforcement” approach. SEC chair Gary Gensler has previously argued that digital assets already fall under existing securities regulations.

In the op-ed, Armstrong added it was unsurprising that Hong Kong is positioning itself to be a global crypto hub, as China looks to challenge the U.S.’s role as the global financial leader in a variety of ways — such as the recent launch of the digital yuan and Belt and Road Initiatives.

Xi calls for deep alignment between Belt and Road Initiative and Eurasian Economic Union #BRI #China
Chinese President Xi Jinping on Wednesday called for a deeper synergy between the Belt and Road Initiative (BRI) and the Eurasian Economic Union (EAEU) as China looks to enhance… pic.twitter.com/bwFcXIvgk4
— Zhang Heqing (@zhang_heqing) May 25, 2023

He warned that failing to pass comprehensive crypto legislation would result in the U.S. needing to play catch-up and spend billions to bring innovation back to the U.S., but noted that even with a “colossal and sustained effort” it might be too late by then.

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Biden Administration

Ted Cruz said it is “more important than ever” to ensure the financial privacy of American citizens is preserved.

Republican Senator Ted Cruz has introduced a bill to block the United States Federal Reserve from launching a “direct-to-consumer” central bank digital currency (CBDC).

In a March 21 statement, Cruz said he introduced the bill to prevent the Fed from developing a retail CBDC “which could be used as a financial surveillance tool by the federal government.”

Cruz stated it’s “more important than ever” to ensure U.S. policy on digital currencies protects “financial privacy, maintain’s the dollar’s dominance and cultivates innovation,” and added:

“CBDCs that fail to adhere to these three basic principles could enable an entity like the Federal Reserve to mobilize itself into a retail bank, collect personally identifiable information on users, and track their transactions indefinitely.”

Cruz claimed the federal government has “no authority to unilaterally establish” a CBDC.

“We should be empowering entrepreneurs, enabling innovation, and increasing individual freedom — not stifling it,” he stressed.

The federal government has no authority to unilaterally establish a central bank currency.

Read about my new bill in @FoxBusiness: Ted Cruz introduces bill blocking Fed from adopting central bank digital currencyhttps://t.co/LoX3u41nA4
— Senator Ted Cruz (@SenTedCruz) March 21, 2023

Cruz’s anti-CBDC bill has the backing of Republican Senators Mike Braun of Indiana and Chuck Grassley of Iowa.

In statements, both expressed the belief that a CBDC would be used as a surveillance tool.

If the bill is passed into law, it would ensure that the state isn’t “snooping” on the finances of hardworking Americans, Grassley stated:

"The American people ought to be able to spend their money how they choose without the possibility that every transaction could be tracked by the government."

The anti-CBDC bill is a second attempt by Cruz, Braun and Grassley, who introduced a similar bill on March 30, 2022 to prohibit the Fed from issuing a CBDC directly to individuals.

However, nearly 12 months later, the bill still hasn’t moved past the introduction phase.

Meanwhile, considerable progress is being made on a U.S. dollar CBDC since President Joe Biden signed an executive order to “Ensuring Responsible Development of Digital Assets” in March, 2022.

In November, the Federal Reserve Bank of New York and several large financial firms including BNY Mellon, Citi, HSBC, and Wells Fargo participated in a 12-week digital dollar pilot program with MasterCard and SWIFT.

Cruz, Braun and Grassley aren’t the only U.S. politicians fighting to stamp out CBDCs.

On March 20, Florida’s Governor Ron DeSantis called on state lawmakers to introduce legislation banning the digital dollar in Florida.

DeSantis compared the digital dollar to China’s digital yuan and claimed the e-CNY has been used to extensively “monitor citizen behavior,” saying:

“Any way they can get into society to exercise their agenda, they will do it. So, what the central bank digital currency is all about is surveilling Americans and controlling behavior of Americans.”

No CBDC in Florida https://t.co/p9pwSTmrlN
— Ron DeSantis (@GovRonDeSantis) March 20, 2023

U.S. Congressman Tom Emmer recently introduced an anti-CBDC bill of his own on Feb 22.

Emmer also spoke of the privacy concerns surrounding CBDCs saying a programmable dollar could be “easily weaponized” as a spying tool to “choke out politically unpopular activity.”

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Anti-Surveillance

Fanusie doesn’t believe the Chinese-led CBDC movement on the global stage will replace the U.S. dollar, but it may cause a series of geopolitical headaches.

A cryptocurrency researcher and former CIA analyst believes the United States government’s relatively slow start on Central Bank Digital Currency (CBDC) development may result in it losing grip on controlling the global financial system.

Yaya Fanusie, the policy head at the crypto advocacy group the Crypto Council for Innovation explained in a Feb. 28 Bloomberg interview that sanctioned states are looking to transact on financial infrastructure that isn’t controlled or heavily influenced by the U.S. in order to move funds more freely cross-borders.

If the U.S. continues to sit on the “sidelines” and lag behind on CBDC adoption, Fanusie believes this may spell “trouble” and cause unforeseen “geopolitical implications” over time:

Fanusie explained that state-issued CBDCs could be a part of this financial infrastructure that becomes globally adopted, and that if the U.S. has little influence over these new standards, then this “impacts U.S state economic statecraft.”

“The potency of our sanctions power comes from the centrality of the U.S. to the financial global infrastructure. So if that shifts a little bit, it doesn't mean that China is going to take over or that the yuan is going to displace the dollar but if there's a viable new rail where sanctioned actors can now transact, that’s trouble.”

The U.S. Federal Reserve has however recently made progress on its CBDC — the Digital Dollar Project — having released the latest version of its whitepaper on Jan. 18:

Today we are proud to release DDP's 2023 white paper update where we revisit our "champion model" proposed in 2020, provide recommendations to the US government and private sector and look ahead to the next stage in #CBDC developments @giancarloMKTS https://t.co/bX5u4zfqMc pic.twitter.com/si2joxbkq9
— The Digital Dollar Project (@Digital_Dollar_) January 18, 2023

However, the Federal Reserve has not received approval from the U.S. government to proceed with the CBDC project.

Fanusie highlighted that China has benefited from a near-first mover advantage, having explored CBDCs since 2014 and launching the pilot version of its digital yuan (e-CNY) on Jan. 4, 2022, which Fanusie says has processed “millions of transactions” across “millions of wallets” so far.

Fanusie added that there is an “array of pilots” testing out smart contracts to add programmability into the CBDC and that China helping other countries adopt similar standards.

He added there is possibly an unspoken “race” going on in the CBDC frontier as nations look to gain a geopolitical edge.

“That's happening whether we want to like it or not.”

However previous commentators on the CBDC race between China and the U.S. have said that China’s CBDC ambition is purely about domestic dominance rather than trying to beat the U.S. dollar.

CBDCs run on state-controlled ledgers, which are reported to be more efficient and easier to use in some cases than decentralized public networks, such as Bitcoin and Ethereum.

However, some opponents of CBDCs believe states are adopting blockchain-powered CBDCs to maintain a degree of financial control over their citizens.

Part of the pushback in the U.S. recently came from pro-crypto U.S. Congressman Tom Emmer, who recently introduced the CBDC Anti-Surveillance State Act in an effort to protect the financial privacy of U.S. citizens from actions by the Federal Reserve:

Today, I introduced the CBDC Anti-Surveillance State Act to halt efforts of unelected bureaucrats in Washington, DC from stripping Americans of their right to financial privacy. pic.twitter.com/lONbHFZMk7
— Tom Emmer (@GOPMajorityWhip) February 22, 2023

Digital Yuan

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