China Crypto Roundup (Dec 7- Dec 14): China and Hong Kong Prepare for Cross-border Digital Yuan Testing, Hong Kong-based Crypto Exchange Halted Withdrawals Amidst Ongoing Investigations in China, China Suzhou’s Digital Yuan Trial Sees Completion
The top stories from the Chinese cryptocurrency sphere this past week include: China and Hong Kong prepare for cross-border digital yuan testing, CEO Global exchange halts withdrawals as founder is detained in China, China’s digital yuan tries to gain a foothold.……
China and Hong Kong prepare for cross-border digital yuan testing
China’s central bank and the Hong Kong Monetary Authority (HKMA) are gearing up to conduct a pilot test of the China’s Digital Currency Electronic Payment (DCEP) project system.
Discussions between Hong Kong and the People’s Bank of China (PBoC) on the trial of the proposed DCEP for cross-border payments has begun. The discussion, which is between PBOC’s Digital Currency Institute and the Hong Kong Monetary Authority (HKMA) is centred around a technical trial. This trial will involve using the DCEP for facilitating cross-border payments, while continuing to make other technical preparations.
The HKMA and the Digital Currency Institute of People’s Bank of China are discussing the technical pilot testing of using e-CNY, the digital renminbi issued by the PBOC, for making cross-border payments, and are making the corresponding technical preparations.
There is not yet a clear timeline for the official launch of the digital yuan in the city, according to the statement.
The planned DCEP test is part of the HKMA’s agenda for its Faster Payment System (FPS) launched back in Sept. 2019. FPS is supposed to offer instantaneous international remittance payment capabilities for Hong Kongers.
Creating a digital yuan bridge will also be a step towards offering multi-currency support on the FPS infrastructure. The HKMA is also conducting joint CBDC studies with both Thailand and Singapore.
CEO Global exchange halts withdrawals as founder is detained in China
According to an announcement published by CEO Global, a Hong Kong-based cryptocurrency exchange, one of its founders had been taken under custody by China’s authorities in the midst of an ongoing investigation that involves alleged participation in a fraudulent bank account and SIM card scheme.
Until November 27, 2020, OKEx cryptocurrency exchange suspended all withdrawals for about one month due to similar circumstances. The impact of the withdrawal suspension was felt among customers and other cryptocurrency users within the region.
The government of China has not relented in its fight against fraudulent financial activities in the region. The pseudo anonymous nature of cryptocurrencies makes it an attraction for people involved in fraud, hence the special focus of the authorities on the industry.
Currently, cases of fraudulent SIM cards and bank accounts scam appear to be on the rise in China. In an attempt not to disclose their identities, many people would rather opt for existing SIM cards or bank accounts held in the names of other people to effect transactions.
China’s digital yuan tries to gain a foothold
At 8 PM Friday, more than $3 million dollars in digital yuan was airdropped to 10 thousand residents of Suzhou. The lucky ones now suddenly each had RMB 200, an equivalent of $30, in their wallets.
The new DCEP trial was significantly different from the “red packet” pilot the government conducted in Luohu back in October. Namely, China wants to broaden the use of the digital yuan wallet beyond just POS terminals in physical stores and is looking to test out a feature that allows users to send money to each other by just touching their smartphones together.
While this is the largest digital yuan trial in the country to date, Suzhou isn’t the only place where the government is currently testing out the new payment system. According to Asia Nikkei, tests are also moving along in other cities, including Chengdu, the Xiong’an New Area, and Hong Kong.