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CCB Clarifies No Bitcoin Use for $3 Bln Blockchain-Based Bond Sales

The Labuan Branch of the China Construction Bank Corporation (CCB) has sought to clarify claims related to its collaborated first blockchain-based bond sales including that Bitcoin will be accepted for settlement.

The branch of the world’s second largest bank, which is not the issuer of the bond but its lead arranger, notes on its website that it will only facilitate the “clearing and settlement of the Bond in USDs” and “does not accept cryptocurrencies including Bitcoin for settlement in any of its banking transactions.”

The clarity is crucial since Fusang Exchange stated in its news release that Bitcoin will be accepted as they announced they are putting up to $3 bln-worth of digital bond on blockchain – though it didn’t indicate the use of the cryptocurrency will go through CCB.

The CCB-Fusang listing, which should start on Friday November 13, didn’t generate mainstream media attention only for its blockchain use but for reportedly accepting Bitcoin as the other settlement currency for the bond trading aside from USD.

And true to it – no direct link has been established so far – Bitcoin’s price has gained about 7% following the bond sales announcement despite reports that up to $300 mln in Bitcoin flowed from popular Chinese exchange Huobi to Binance after a government crack down on its operations which could have had an adverse effect on the market.

Aside that a branch of Chinese government-owned CCB accepting Bitcoin would send a mixed message on China’s stance on the top cryptocurrency, clearing the air on the subject is also significant as the announcement coincides with CCB’s president being reportedly appointed as a deputy governor of the People’s Bank of China (PBoC).

Caixin reports that Liu Guiping is leaving the office as CCB president which he took last year to fill the vacancy left by Zhu Hexin, who became the Communist Party’s chief of state-owned financial conglomerate Citic Group Corp. in March and later also assumed the role of chairman.

While the appointment may be a mere coincidence, Liu’s more than three decades experience in the financial industry and regulation, mostly in the banking sector, may lead one to suggest that his allegiance will be to strengthen efforts to make the PBoC’s CBDC succeed.

A recent Coindesk report suggests that the PBoC might use the digital yuan as part of its broader effort to curb the growth of WeChat Pay and Alipay owned by Ant Group which also runs a micro-lending business and provide the unbanked with financial services.

Ant had a $35 billion dual IPO in the making until the Shanghai and Hong Kong stock exchanges halted the offering last week after China’s financial regulators raised concerns over its micro-lending business for its potential to add more debt to the country’s highly-leveraged economy.

The planned IPO exposes fault lines in the digital payment industry, says Tanvi Ratna, CEO of fintech think tank Policy 4.0, in the report, to explain the PBoC’s motivation to launch its digital yuan and give itself more power to keep third-party payment platforms in check.

Now, not just Ant Group, the tighter draft online microlending regulations could cast a cloud over e-commerce giant JD.com Inc.’s fintech unit ahead of its Shanghai IPO according to Caixin. The Nov. 2 draft rules that stipulate stricter requirements for online microlenders like Ant Group can hinder the major force driving the revenue growth of Jingdong Digits Technology Holding (JD Digits) for the past few years, it says.

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