The crypto ban may also be intended to deter capital flight. You are reading: Why is china cracking down on crypto Fan Yifei, a deputy governor of the PBOC, announced last week that the eCNY has entered a “sprint stage” ahead of the February 2022 Winter Olympics in Beijing. Others worry that the eCNY will be used to retaliate against international companies that speak out on human rights issues. Some observers fear that the eCNY will be used as a tool to strengthen the Chinese Communist Party’s domestic surveillance. The ban comes as the People’s Bank of China (PBOC), China’s central bank, is piloting its own digital currency, the eCNY or “digital yuan.” Unlike private cryptocurrencies, the eCNY is issued directly by the central government and is being designed to provide the PBOC with near-real-time financial data on user transactions.

While some commentators are skeptical that this latest effort will succeed given past failures, this latest ban is the first-ever blanket ban on all cryptocurrency transactions, and it involves the largest number of regulatory agencies to date. It follows narrower bans issued in May of this year, as well as in 20. The action prohibits all crypto-related transactions and services provided by off-shore crypto exchanges but does not prohibit the possession of cryptocurrencies. Citing concern for national security and “safety of people’s assets,” 10 government agencies announced the crackdown in an effort to clamp down on illicit activities and financial speculation. 24, China announced a blanket prohibition on all cryptocurrency transactions and mining. He said the e-CNY’s “acquiring environment” remains a work in progress and is a primary factor holding back a full-scale launch, along with issues related to completing the risk-management and regulatory frameworks.Ī McKinsey report in October pointed to e-CNY as an example of how official central-bank-issued digital currencies “have been met with only moderate adoption.” While the trials show that the e-CNY actually works, the McKinsey report said, they compare with more than two billion monthly active users reported by WeChat Pay and Alipay.On Sept. Speaking at a November conference, Mu Changchun, who runs the e-CNY project at the People’s Bank of China, appeared to acknowledge the demand challenge. The e-CNY wasn’t a payment option on sites run by Alibaba Group Holding Ltd., which in 11 days racked up sales of nearly $85 billion, or 8.5 times the amount of digital yuan transacted over 18 months of trials. The company said 100,000 customers used e-CNY in 240,000 orders but declined to say how much of the total $55 billion spent during the sales period it constituted it was likely a fractional portion. made it a payment option during the event as part of a plan to encourage adoption of digital wallets. Pointedly, China’s annual online shopping extravaganza in November, known as Singles Day, featured only limited promotion of e-CNY, a currency designed for the internet. Based on central-bank numbers, the average amount spent per transaction was under $1. Giveaways aren’t nationwide they have been run in particular cities on specific dates and so far have left out small towns and rural areas. “Primarily, e-CNY has been distributed in free-to-enter lottery-type promotions and through discount deals designed to encourage downloads of the central bank’s app and digital wallets. I’m sure a majority of participants in the payments ecosystem hope this remains true: There is also interest in how quickly consumers might adopt digital money, but given the poor consumer adoption reported here, perhaps the payment tools consumers use today are sufficient. The primary concern among world leaders is its potential impact in world trade. The world is anxiously watching China’s digital yuan to learn how quickly a Central Bank Digital Currency (CBDC) will be adopted.

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