China has banned all cryptocurrency startups and transactions. Authorities have also shut down 100 exchanges since 2017 due to the trading of the digital coins.
According to a Peoples Bank Of China official, China will be releasing its own coin sometime soon. This is said to be an aim to control cryptocurrency circulation, especially since news of Facebook’s crypto launch, Libra. The supple of China’s coin will be overseen by the central bank and other Chinese financial institutions to keep regulation in check. Being based on a two-tier system, the coin will also be subject to fraud and money laundering monitorization.
To release an official Chinese cryptocurrency in circulation a lot of preparation is needed. In regards to laws around the use of it and whether its system can handle the transaction sizes that it may undergo. Mu Changchun, deputy director at the PBOC’s payment department stated that researchers have been working on China’s cryptocurrency since the beginning of 2018. He also added that it will not be based on blockchain technology alone.
Research was sped up after worry that Facebook’s Libra coin could become a massive trend globally, including to the Chinese. The US, UK, and Russia have also expressed concerns regarding Facebook’s currency launch. Facebook holds 2.41 billion active users, making it the larger social media platform in the world. Facebook is also a hub for marketing, meaning the hype for its coin will not go unnoticed. Libra has created a global concern for uncontrolled capital flows.
China is not the first country to launch its own cryptocurrency and is not expected to be the last. Venezuela launched its own coin in 2018 to avoid US sanctions yet failed to become popular. The actual release date of China’s cryptocurrency is still unknown and undecided.