Cryptocurrency and Digital Yuan in China
Cryptocurrency and digital yuan when considering to start a business in china: up to this date and according to the People’s Bank of China, China has not yet approved any legislation in order to regulate cryptocurrencies. Regulators are not recognizing cryptocurrencies as legal tender or a tool for retail payments. In addition the Chinese banking system does not accepts any existing cryptocurrencies or provides related services.
On the other hand
Despite cracking down on privately-issued cryptocurrencies, most people would say China is leading the world in developing a digital currency. Their intention is clear, create a currency to call it their own National Digital Currency. The digital yuan first trials date as yearly as 2014 and has already given away millions during its initial implementing stages. This is how it operates:
The People’s Bank of China (PBOC) is investing a large amount of work on the digital yuan also called as central bank digital currency (CBDC). The main goal is to partially substitute some of the cash in circulation.
Ok, but what is the digital yuan?
The digital yuan is a virtual currency and how the Chinese central bank intends to digitalize bank notes and coins circulating in China. The virtual transactions environment in China is far ahead of other countries. When it comes to cashless payments, nearly 800 million users do it every day. The digital yuan is another move to speed that process even faster. It will be legal tender in China and no interest will be paid on it.
“The use of cash is decreasing. Eventually cash will be replaced by something in digital format. That is one of the big drivers behind this,” Yan Xiao, project lead for digital trade at the World Economic Forum.
Why is the digital yuan being introduced?
Fan Yifei, deputy governor of the PBOC, mentioned in a press conference “pressing need to digitalize cash and coin” as producing and storing physical currencies is expensive. In another occasion, Fan stated that paper cash and coins are not easy to use, easily counterfeited and because of their anonymity, could also be used for illicit purposes.
Another reason behind the PBOC’s efforts could be to increase competition in the payments space and reduce systemic risk. China’s digital payments arena is dominated by Alipay, which is run by Alibaba affiliated Ant Group. As well as WeChat Pay, run by internet giant Tencent. Via their respective apps, these two companies account for astonishing 98% of all daily digital payment transactions in China.
Cryptocurrency and digital yuan when doing business in China
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