JD.com Breaks New Grounds With China’s CBDC Involvement
The proposed testing of China’s central bank digital currency (CBDC) in Suzhou is going to involve the fintech arm of JD.com accepting digital yuan as payment for some products on its online mall, the Chinese e-commerce company has said.
JD Digits will participate in the Suzhou programme put together by the municipal government and the People’s Bank of China for 200 digital yuan “red envelopes” to be issued to 100,000 consumers selected through a lottery, Reuters reports citing a post on the company’s official WeChat account.
The Dec. 11 giveaway of digital yuan – cash vouchers worth 20 million yuan in total – to citizens of Suzhou, near Shanghai, will be the second experimentation after Shenzhen. It is meant to see whether the platform can handle digital yuan payments successfully and under pressure as Dec. 12 — or “Double 12” — approaches when orders are usually high as online retailers offer steep discounts to shoppers.
First online platform for China’s CBDC emerges
The confirmation suggests that JD.com would become the first virtual platform to accept China’s digital currency, a plus considering it is China’s second-biggest online retailer after Alibaba.
China recently had a fallout with Alibaba Group’s Ant Financial despite its founder, Jack Ma, having earlier hinted on how digital currency stands to redefine the future financial system and the role China could play in it. The company’s planned IPO – which could have seen it be the largest in the world – was later questioned by regulators in China and subsequently suspended.
Nonetheless, with JD.com’s participation in the pilot, it is a probable indication that Tencent’s WeChat and Alibaba’s Ant Group, China’s leading digital payment companies, will find their way in too.
Draws attention to related developments
Though details are still sketchy at this time, JD.com having been involved in the blockchain space including running a native chain for its platform, could mean a lot for payments and its entanglement with the distributed ledger technology in China.
JD.com’s involvement would contribute to the looming global digital currency discourse that would likely arise as Facebook’s venture into the cryptocurrency space is back in the news with its Libra now-turned Diem.
The social media platform shook the global stage when it proposed the release of its Libra stablecoin about two years ago (though hasn’t materialised) and got many countries on their toes wíth the desire to issue their own digital currency. Now, as it proposes a January 2021 launch following the name change, it is not clear what impact it would have on global discussions surrounding countries’ CBDC drive.
While more could still come, the US has already introduced a bill requiring stablecoin issuers to have a bank charter. The Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act seeks to focus on regulating stablecoins such as Diem, its promoters say.
“Digital currencies, whose value is permanently pegged to or stabilized against a conventional currency like the dollar, pose new regulatory challenges while also represent a growing source of the market, liquidity, and credit risk,” their release states.
Meanwhile, the Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, noted that they and the Digital Currency Institute of the PBoC have been ”discussing the technical pilot testing of using e-CNY” for making cross-border payments. He adds that since the renminbi is already in use in Hong Kong, hence the e-CNY is like cash in circulation to bring greater convenience to users.