China is considering setting up an exchange to buy and sell digital assets in Beijing. As part of the State Council’s plan to support financial services in the capital, the exchange will also promote the use of the digital yuan.
China mulls launching a digital yuan-based exchange in Beijing
Efforts to promote the development of central bank digital currencies (CBDCs) have been ramped up recently. For example, the cabinet has demanded faster trials and forced institutional banks to set up the necessary infrastructure with companies.
These efforts include China’s latest attempt to become the top blockchain power in the world within the next five years by effectively nationalizing the industry by banning private cryptocurrencies and promoting the digital yuan. Earlier this year, China’s Ministry of Industry and Information Technology and the Office of the Central Cyberspace Affairs Commission jointly issued guidelines for blockchain development, hoping to make it the most advanced in the world by integrating it into the Chinese economy and society.
This helps to contextualize efforts China has made over the past year to ban cryptocurrency trading and mining in the country, despite previously having the highest hash rate globally. Last month, the People’s Bank of China (PBoC) issued another crypto statement effectively banning any crypto-related businesses from operating in mainland China. It later added cryptocurrency miners to a negative list that prohibits any foreign investment in such businesses. In addition, China’s National Development and Reform Commission (NDCR) has added cryptocurrency mining to its blacklist.
China has been in the process of creating a virtual version of the legal tender since 2014. Several trials took place in multiple cities last year, encouraging digital yuan among consumers and merchants. Although the initial response has not been enthusiastic, authorities have continued to push for it. A broader rollout is expected during the Winter Olympics to be held next year in Beijing.
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