China has launched an international trial for its central bank digital currency (CBDC) at the 2022 Beijing Winter Olympics, despite concerns raised by US Senator Pat Toomey (R-Pa.) about the digital yuan’s ability to circumvent US sanctions.
Trials of digital yuan, which have been running in China since 2019, were introduced to athletes and foreign visitors on Thursday as a way to pay for goods inside the Olympic Village in addition to Visa payments and cash.
With the Winter Olympics as a platform to showcase to the rest of the world, China hopes to increase the digital yuan’s presence throughout the country.
The trial comes on the heels of China’s recent announcement of 164 national blockchain entities to participate in domestic retail CBDC tests to assess the feasibility of its product across a wide range of industries. Although cryptocurrency is prohibited in the communist state, China is a strong supporter of blockchain technology, albeit in a much more private, centralised, and censored form.
Toomey asked policymakers to “closely examine Beijing’s CBDC rollout” during the games in a letter sent to Treasury Secretary Janet Yellen and Secretary of State Antony Blinken on Wednesday, and to provide his office with a briefing by March 7.
“Analysts have raised the eCNY’s potential to circumvent US sanctions, facilitate illicit money flows, strengthen China’s surveillance capabilities, and provide Beijing with “first mover” advantages, such as setting standards in cross-border digital payments,” Toomey wrote.
According to the letter, Toomey is requesting information on the CBDC rollout, including its distribution, user experience, and the underlying source code, in order to determine “ulterior motives,” censorship features, or security flaws.
Among other things, the senator wants to know how much non-Chinese government officials, including those from the United States, used the digital yuan. He also stated that China’s crypto crackdown provides an opportunity for the United States to be a “forerunner” in crypto innovation, “grounded in individual freedom and other American and democratic principles.”
Toomey, a member of the US Senate Committee on Banking, Housing, and Urban Affairs, has long advocated for crypto regulation with a “do no harm” mindset, and has previously asked the SEC to avoid impeding innovation as the US determines how best to approach fintech innovation.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.