- Bitcoin tapers off but continues to trade strongly above USD 7,000 on Christmas day
- People’s Bank of China (PBoC) official says digital yuan won’t need actual currency reserve backing
- Shenzhen Stock Exchange (SSE) in China has launched an index of top 50 blockchain companies
Bitcoin trading has seen a slight leveling off for bullish action during Christmas, as price threatened to come close to the USD 7,000 support, although is now trading close to the daily high at USD 7,292 (CoinDesk).
One of the big news items comes, unsurprisingly, from China, where a central bank official has apparently said that the planned digital yuan coming out next year will be unlike Libra, in that it won’t need to be backed by actual currency reserves.
Local financial publication Shanghai Security News reports that the People’s Bank of China’s (PBOC) digital currency research subsidiary boss, Changchun Mu, said China’s new cryptocurrency will be able to act as an asset with a stable value without the need for a currency basket.
Mu was talking to journalists at The China Finance Association Academic Annual Meeting and China Finance Forum Annual Meeting in Beijing over the weekend. He said this aspect alone differentiated the new Chinese national crypto from other centralized projects like Facebook’s crypto, Libra. He said:
“The [digital yuan] currency is not used for speculation. The RMB is used to spend, not for speculation. It does not have the characteristics of bitcoin speculation, nor does it require the currency basket assets to support the value of the currency like stable currency.”
It was not made clear if the central bank will seek an alternative method to peg the central bank digital currency (CBDC) to the country’s renminbi (CNY). Nevertheless, its Digital Currency Research Institute has been hard at work at making the currency system known as Digital Currency Electronic Payment (DCEP), since 2014. CoinDesk says that an ex official had confirmed in November that retail payments and cross-border payments would form two main use cases for the currency.
It was only after Facebook had unveiled its Libra plans that China has publicized its own plans for a crypto, but it is keen to remind people that the digital yuan would be a cheaper and faster remittances solution, and now, won’t need a basket of currencies to remain stable, unlike Libra.
Mu also promises that the PBoC would guarantee privacy for transactions, much like cash, and still be able to trace illegal activity, without compromising privacy and increased surveillance, as many are thinking will happen.
If China’s 2020 plan succeeds, it will be the world’s first major economy to launch a CBDC, and all signs appear to show that it is on track to do just this. Mu confirmed it was soon able to issue the currency to Chinese citizens using partners like Tencent and Ant Financial:
“At present, the digital currency DCEP of the People’s Bank of China has basically completed the top-level design, standard formulation, functional research and development, joint debugging and testing.”
Meanwhile, more news in China. The Shenzhen Stock Exchange (SSE), already famous for mirroring its city’s namesake as a tech company haven, has now launched an index tracking the performance of 50 blockchain firms. Their Christmas eve announcement confirmed that they will base the new index on the stocks of 50 companies listed on the SSE as long as they participated in the blockchain industry.
SSE will use the average daily market value over the past six months to assess and rank the top 50 blockchain-related stocks. This means the index will be updated twice annually, on the second Friday of June and December
SSE says it has ensured that the index only ranks companies actually using blockchain technology, and not just merely associating themselves with blockchain for hype.
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