China recently made headlines by stating that it will protect the privacy of users of its first cryptocurrency, the digital yuan, thus calming the concerns of critics who had expressed great worry about the issue in the country.
The Director-General of the Digital Currency Research Institute of the People's Bank of China (PBoC), Mu Changchun, reinforced the government's commitment to protecting the privacy of cryptocurrency users, after the country faced a long debate that was intensified by privacy scandals involving its citizens.
According to Mu, neither the PBOC nor the platforms that convert and operate digital currencies will have access to information involving the transactions. And the authorities who need to investigate must request authorization to do so.
Chinese cryptocurrency promises maximum level of privacy protection.
According to Mu, the digital yuan has the highest level of privacy protection among all existing platforms, but he cautioned that, despite its level of privacy, the currency should not be so anonymous as to facilitate money laundering.
Other important points in Mu's speech were:
- The mechanism that will isolate and restrict access must be created in such a way as to protect user data, and furthermore, the operators responsible for this data must create a system that can guarantee this protection.
- Authorities will need authorization to examine or freeze customers' wallets for investigation;
- Regulatory bodies can penalize the misuse of personal data;
- China may implement regulations to combat money laundering and the financing of terrorism through the use of the digital yuan.
Mu told the Securities Times at a forum that: "On the other hand, it also prevents and combats illegal activities, including money laundering, terrorist financing and tax evasion, while maintaining the need for financial security.".
The digital yuan has undergone numerous testing phases in different Chinese cities, primarily during the Winter Olympics. It was through these tests – which included pilot schemes and deployment in the transportation sector – that it was determined that the CBDC could operate in the same way as traditional banknotes and coins.
"Banknotes and coins can be used to buy gold and convert foreign currency, just like e-CNY., Mu stated.
The US opposed the use of the digital yuan in the country.
In the United States, three senators introduced a proposal that aimed to prohibit the use of the digital yuan in app stores in the country's cyberspace, arguing that... Chinese Communist Party could make use of your criptomoeda to spy on its users.
At the 5th China Digital Summit in Fuzhou, which was recently held, a series of products tailored for use with digital yuan were revealed, such as a new mobile application for CBD, presented by China Construction Bank (CCB), which It consists of a tangible digital wallet for yuan, as well as a chip card for customers.
To date, approximately 37 alliances have been formed to promote the use of the digital yuan, including the Agricultural Bank of China which established partnerships with supermarkets for this purpose.
What is the digital yuan?
The digital yuan is the cryptocurrency of the People's Bank of China, making China the first major power to launch a government-issued cryptocurrency for financial transactions within its territory. This benefits the Chinese government in its task of monitoring the economy and its population, while also providing the advantage of the currency not being tied to the financial system currently dominated by the dollar.
China is thus seeking to boost consumption in the country, which is still very wary of the effects of the pandemic's slowdown.
Following the Chinese government's ban on Bitcoin, the digital yuan has emerged as an alternative for the population, diversifying the Chinese payment system and meeting the demands of a younger demographic.
