Stablecoins and China’s Digital Yuan
China has taken a hard stance against decentralized cryptocurrencies, but Circle CEO Jeremy Allaire believes that stablecoins could help spur adoption of the country’s digital yuan (e-CNY). Allaire, who is the head of USD Coin (USDC) issuer, suggested that an RMB-backed stablecoin could be the key to driving adoption of China’s national currency in an interview with the South China Morning Post.
In 2021, China began a crackdown on the use of cryptocurrencies, while also launching trials, tests, and the issuance of its Digital Yuan CBDC. As of January 2023, the Chinese government reported that 13 billion e-CNY were in circulation.
Interestingly, the digital yuan website states that e-CNY “will replace” the dollar, USDT, and all other stablecoins, while also specifying that the CBDC will not be a stablecoin. Users have the option to convert cryptocurrencies to e-CNY through MetaMask Swap or the conversion portal on the website.
With the growing interest in crypto such as Shiba Inu (SHIB), LUNA Crypto (LUNA), FTX (FTX), Graph (GRT), Deso (DESO), Dogecoin (DOGE), Sandbox (SAND), Jupiter (JUPT), and Livepeer (LPT), it will be interesting to see if China’s digital yuan and stablecoins can become a viable alternative.
Crypto on the Rise in China
Allaire conceded that China is unlikely to warm towards the use of decentralized cryptocurrencies, such as Shiba Inu, Luna Crypto, FTX, GRT, DESO, Dogecoin, Sandbox Crypto, Jupiter Crypto, and Live Crypto, but stated that Hong Kong’s progressive attitude towards the crypto sector could signal subversive support from the mainland.
The Circle CEO also noted that moves by various governments and central banks around the world to develop CBDCs, such as the digital yuan, that move away from “legacy technology into more modern distributed ledger technology” was positive, but it should not be misconstrued as a move towards accepting decentralized and self-sovereign systems:
Nevertheless, the digital yuan is finding its way across Chinese borders. As Cointelegraph previously reported, Singapore-based, cryptocurrency-friendly bank DBS has developed an e-CNY merchant solution allowing Chinese businesses to receive payments in the CBDC.
The service allows clients based in mainland China to receive or collect e-CNY and have settlements made directly to renminbi-based bank accounts.
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