Tsinghua University’s Digital Fiat Currency Trial Program Causes Controversy in China
Of late, Tsinghua University, one of China’s most prestigious universities, launched the first trail program of the digital fiat currency experiment in China. This initiative causes much concerns from the crypto community and the controversy has been swirling around.
the Department of Computer Science of Tsinghua has jointly launched the digital fiat currency trail with China UnionPay and Aershan Financial Technology. They have launched the campus version of a digital wallet APP which can be practically used in the school cafe.
It was reported that, this application trial consists of a digital wallet that is able to provide QR code payment services after binding to a bank card. The cash balance of the bundled digital wallet account will also be displayed on the APP home page.
According to the Digital Wallet User Service Protocol provided by Aershan Financial Technology, the digital currency is just a digital version of money, an ‘advanced’ form of expression. It is permanently anchored to 1:1 with the RMB, and the balance in the digital wallet represents the number of digital currencies.
Transfer-in refers to the transaction process of converting the bank account balance into digital currency. In the process of making the withdrawal, the reduced balance in the bank card is equivalently converted into the balance in the digital wallet.
Transfer-out, is a reversible operation with the transfer-in. It is the process of converting user’s digital currency into the balance of the bank card. During the transaction of depositing money, the reduced balance in the digital wallet is equivalently converted into the balance in the bank card.
‘Transferring’ refers to the process of digital currency transfer between users.
However, this trail project also causes a lot of disputes. There are two main points of the controversy:
First of all, the digital fiat currency is called the “Central Bank Digital Currency” (CBDC) which means this kind of digital currency can only be issued by the central bank. Whereas, the central bank neither issued a CBDC nor participated in the trial program.
Secondly, the Aershan Financial Technology does not have the license for providing payment services. As thus, the firm is not qualified for the launching of digital fiat currency.
An insider indicated this trial may not be associated with digital fiat currency without the central bank’s participation. According to the expose resources, the digital fiat currency program has been halted due to the financial risky and the regulatory issues.