Digital Yuan can be set up on Ethereum, Chinese official reveals

• A Chinese ‘SEC’ official involved with the development of the digital yuan has revealed that the CBDC can be set up on the Ethereum network.
• The virtual currency is currently in its testing phase involving various banks with the government pushing to launch it in the upcoming Olympic games.

Yao Qian, Director of the Science and Technology Regulatory Bureau of the China Securities Regulatory Commission, has shared his views on the future of the digital currency developed by China. One might think of Yao Qian as an SEC commissioner. Furthermore, with a friendly attitude towards cryptocurrencies, he’s been equated to ‘crypto mom’ Hester Peirce.

Since the inception of the digital yuan back in 2014, Qian has been involved with the CBDC. In a recent conference, he has revealed that there will be more to the digital yuan than a simple simulation of physical currency. According to the expert, the digital currency will move to become a smart currency. This will be done through smart contracts. He further notes that this is a path that has been explored by a number of central banks including Singapore, the European Central Bank, the Bank of Japan, and Canada.

Yao Qian, a Chinese SEC official, said that the central bank's digital currency can be set up on the Ethereum network. But he said that he only represents personal academic views.

— Wu Blockchain (@WuBlockchain) May 31, 2021

Through smart contracts, the digital currency can grow into a complex system that encompasses all modern advantages of being “digital”. He went on to add, “We can imagine that if digital dollars and digital yuan run directly on blockchain networks such as Ethereum and Diem, then central banks can use their BaaS services to directly provide users with central bank digital currencies without the need for intermediaries”.

He acknowledged that there have been security risks with smart contracts in the past which compels central banks to start simple and gradually expand. The technology will get more secure as it continues to grow and mature he explained.

China undermining Bitcoin to bolster digital Yuan

Although the director’s comments represent his own personal views, it is a reflection of the current attitude ahead of the CBDC launch. This launch is expected in the coming months and some analysts believe it to be the reason that China has been taking action to crack down on Bitcoin. By limiting Bitcoin’s influence, the government can easily promote the digital yuan.

The government has in recent weeks condemned Bitcoin’s value and energy consumption. With China carrying great influence in the wider market, the FUD has led to a record drop in the last month.

The CBDC is set to be the first major digital currency and real threat to the dollar’s dominance. Positioned for international use, it is set to be faster, cheaper and more transparent than the dollar. As such, it has sparked discussions of a digital dollar in the US. However, top officials have insisted that while the case for this is imminent, there is no immediate need to launch a digital dollar or threat imposed on the dollar’s dominance.