China posits central bank digital currency as the answer to the global crypto craze

China has a long-term plan for virtual assets that is surprisingly innovative and pioneering, given its acts of antagonism toward the cryptocurrency industry.

Since 2013, China has been introducing discouraging crypto development policies that eventually led to the nationwide extensive crypto ban in September 2021. The prohibition of cryptocurrency transactions and mining has incited crypto activists to complain about lost opportunities. Even the Chinese courts have at times dismissed cryptocurrencies by disowning their victims.1

If it had the desire to do so, China could have become a leading crypto mining hub, contributing more than 30% of the global hash rate (i.e. the total computational power dedicated to crypto mining) by the sheer force of its 1.4 billion population. By imposing a series of crypto-unfriendly rules, China’s global hash rate has dived to 0%. China seems to have dethroned itself and ceded its “trillion-dollar” crypto mining crown to competitors such as Kazakhstan and the United States.2 3

But the naysayers are speaking out reflexively and thoughtlessly. China is the first economic powerhouse to test e-CNY, a central bank digital currency (CBDC) with enormous potential.

Many countries have toyed with the idea of a CBDC, but few have the capacity or infrastructure to issue one or to undertake extensive pilot schemes. Once China launches e-CNY nationally, it could traverse this vast geographical and financial territory to reach the entire population.

If China’s e-CNY initiative is successfully implemented, it will be one of the world’s most advanced efforts to commercialise a CBDC through large-scale experiments and deployments.

Source: https://www.lexology.com/library/detail.aspx?g=ef19490b-6684-42fb-bdee-7a32a8d378b6