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China could benefit from yuan stablecoin over its CBDC — Circle CEO

July 11, 2023 Coin Telegraph

CBDC

China may have banned the use of cryptocurrencies, but stablecoins might have a role to play in the proliferation of its national currency.

Although China has closed its doors to decentralized cryptocurrencies, Circle CEO Jeremy Allaire believes that stablecoins could play a role in the proliferation of China’s digital yuan.

Allaire, who heads up the company behind the United States dollar-backed stablecoin USD Coin (USDC), suggested that a yuan-based stablecoin might be China’s best bet for driving the adoption of its national currency in an interview with the South China Morning Post.

“If eventually the Chinese government wants to see the RMB [yuan] used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency.”

China cracked down on the use of cryptocurrencies in 2021 while simultaneously blazing the trail for the trial, testing and issuing of its digital yuan central bank digital currency (CBDC). As of January 2023, the Chinese government noted that some 13 billion digital yuan are in circulation .

Interestingly, the digital yuan website claims that the currency will replace the dollar, Tether (USDT) and all other stablecoins, while stipulating that the CBDC will not be a stablecoin. The website allows users to exchange cryptocurrency for digital yuan through MetaMask or its own conversion portal.

Allaire conceded that China is unlikely to warm toward using decentralized cryptocurrencies and stated that Hong Kong’s progressive attitude toward the crypto sector could signal subversive support from the mainland.

The Circle CEO also noted that moves by various governments and central banks around the world to develop CBDCs that move away from “legacy technology into more modern distributed ledger technology” was positive, but it should not be misconstrued as a move toward accepting decentralized and self-sovereign systems:

“There’s a whole bunch of things that are useful from that, but I view that as very different from the work that the private sector does to innovate on the public internet.”

Nevertheless, the digital yuan is finding its way across Chinese borders. As Cointelegraph previously reported, Singapore-based, cryptocurrency-friendly bank DBS has developed a digital yuan merchant solution allowing Chinese businesses to receive payments in the CBDC.

The service allows clients based in mainland China to receive or collect digital yuan and have settlements made directly to yuan-based bank accounts.

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China doles out millions in digital yuan in bid to boost adoption: Report

February 6, 2023 Coin Telegraph

CBDC

Multiple Chinese city governments have given away millions worth of e-CNY to try to promote consumption around the holiday season.

Millions of dollars worth of China’s Central Bank Digital Currency (CBDC) has been handed out across the country over the Lunar New Year period in a bid to boost its takeup.

According to a Feb. 6 report in the Global Times, an English-language outlet of the state-ran People’s Daily newspaper, around 200 “activities” for the e-CNY were launched across the country during the holiday period.

These "activities" were made to “promote consumption” — the first of such since the government recently relaxed COVID-19 restrictions.

Multiple cities reportedly gave away over $26.5 million, or 180 million yuan worth of the CBDC in programs such as subsidies and consumption coupons.

One example provided by the outlet included the Shenzhen local government handing out over $14.7 million (100 million yuan) worth of e-CNY to subsidize the catering industry in the city.

*A QR code (blurred) for paying with digital yuan is displayed at a Chinese convenience store, users can scan the code and use e-CNY to pay for goods.* *Source*

A Feb. 1 China Daily report said Hangzhou issued each resident a $12 (80 yuan) e-CNY voucher on Jan. 16 with the total giveaway costing the city around $590,000, or 4 million yuan.

Some of these initiatives proved to be very popular among residents.

Citing data from the e-commerce platform Meituan, the Global Times rreport stated that e-CNY given away by the Hangzhou city government for the New Year celebrations was taken up by residents within nine seconds.

The last few months has seen the government enacti other targets and features to boost the usage of the CBDC.

On Feb. 1, senior ruling party officials in Suzhou city set a tentative key performance indicator for the end of 2023 to have $300 billion (2 trillion yuan) worth of e-CNY transactions in the city.

The target is ambitious considering cumulative e-CNY transactions had crossed $14 billion (100 billion yuan) in October 2022, two years after the CBDC’s launch.

In late December last year, in a bid to attract new users the e-CNY wallet app introduced the ability to send “red packets,” called hongbao in China, which is used for gifting money around the holidays.

The wallet app received an update in early January allowing users to make contactless payments using Android phones — even if their device is without internet or power.

In December, a former Chinese central banker called the results of the e-CNY trials “not ideal,” and admitted, “usage has been low, highly inactive.”

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