Digital Yuan Uplifts Crypto Investors Amidst Restrictions in China
China is enthusiastic about its own digital yuan despite its nonchalance towards crypto assets.
Self-sufficiency has always been China’s favorite motto. Unlike its hostile viewpoint on digital assets, the government of the world’s most populous country has an entirely different stance on central bank digital currencies (CBDC). Over the past year, the authorities launched several initiatives to popularize the digital representation of its national currency. As reported by Global Times, its latest move includes the distribution of over US$2 million worth of digital yuan to the residents of Futian- the central business district of China’s third-largest city – Shenzhen.
So how does it work?
The e-CNY will be separated into 130,000 red packets and will be given away on a lottery method using WeChat payment. Residents can join the raffle by registering at the latter’s application. Later on, they will be able to spend the financial product at nearly 5,000 stores in the district with no requirement to make a minimum purchase. This is not the first time Shenzhen’s authorities have distributed digital yuan among the city’s population. In 2020, they handed out 10 million digital yuan (about US$1.5 million) worth of e-CNY.
How is it growing?
At the end of 2021, the number of Chinese who have opened digital yuan wallets topped 140 million, making up about 10% of the total population. The interest in the product continued to surge, and that figure soared to over 260 million at the beginning of 2022. Some renowned local companies even accepted the CBDC as a payment method. For one, JD.com allowed customers to use it for settlements during the shopping festival – Singles Day (November 11). China’s messaging app giant – WeChat – also enabled its clients to facilitate transactions in e-CNY. The service became available in all regions where the product is being trialed, including Beijing and Shanghai. In addition, the Chinese officials permitted foreign visitors and athletes to employ the CBDC during the Beijing Olympic Games in February. As CryptoPotato reported, over US$315,000 worth of digital yuan was transacted daily at the sports event. So, it is quite safe to say that even though China is quite strict against the implementation of decentralized currencies, the government is at least quite enthusiastic about integrating some form of centralized digital currency into its national economic system.