It’s no longer a secret that China is barrelling down towards the path towards developing its own digital currency. However, given that not much is known about the asset, interested parties have been made to rely on details provided by government sources as anticipation continues to build. The latest in those details is an interview with a top member of the country’s Communist Party, where he voiced support for the government’s approach towards digital currency development and other digital assets in the country.
A Digital Yuan for China’s Global Dominance
The government aide is Chen Weigang, former Vice President of China Insurance Regulatory Commission of the Communist Party. In an interview with Yiben blockchain media, the former policymaker dished on the rationale for the Chinese government moving into the digital currency space, explaining that the upcoming Digital Yuan will play a significant role in helping the government to drive the Yuan – its fiat currency – to the forefront of international economic development.
Many have posited the same thing, pointing alarms to the Federal Reserve and the United States government that allowing China to continue with digital currency development could be detrimental to the status of the Dollar as the world’s reserve currency. Earlier this month, Norihiro Nakayama, the Vice-Minister for Foreign Affairs in Japan, encouraged the Fed to join in the coalition of countries studying the effects of CBDCs on their economies, explaining that continued passiveness could leave China’s currency as the global standard in the field.
As he explained, it could also mean that the United States could no longer be the world’s lone financial superpower in the long run.
Time to Rid China of all Crypto Activities
During the interview, Chen also spoke on the government’s approach to regulating Initial Coin Offering (I.C.O.) Ponzi schemes and other related crimes in the country. He explained that crypto trading and I.C.O.s need to be eradicated from the country, adding that such “speculations” aren’t the right way for the country or its people to achieve financial development.
However, he also pointed out that the government has had difficulties with regulating this space because there are no specific regulatory enforcement agencies yet. As he explained, a solution to the issue of illegal I.C.O.s and crypto speculation will only be achieved when there’s a collaboration between some of the country’s top regulatory bodies – including the Banking and Insurance Regulatory Commission, the Securities Regulatory Commission, Public Security Organization, and the Internet and cultural authorities.
He also shared his forecast for the digital asset trading service in the country, explaining that the supervision of these companies will become so strict that the market will be basically non-existent.
“For example, Banks and formal payment institutions will be prohibited from providing channels for digital currency transactions. Private deals may continue, but they will not be mainstream.”
Such an approach will leave the market ripe for a single player – the Digital Yuan. The government seems to understand this as well, as it went on a brutal, sweeping campaign against crypto businesses across some top tech and financial hubs in the country towards the end of last year. The effort had a profound effect on over 200 crypto businesses, with many either having to move shops to save themselves or close down completely.