Inside the decentralized heist: How a group in China laundered $307 million in TetherThe long-awaited Chinese e-Yuan has been released, and investors are all gearing up to jump in on the bandwagon. Central bank digital currencies are gaining momentum, with more than 70 percent of nations working to create state-backed cryptocurrencies.
China is leading the CBDC race. President Xi Jinping has already remarked that blockchain development is crucial for next-gen technological and industrial innovation. The release of Chinese e-Yuan signals that same intent. The Asian giant is hoping that global investors lap up this concept to promote digital currencies. The authorities have not shared much detail about how the cryptocurrency will be integrated into the country’s financial mechanisms. Also, the true decentralization credentials of Chinese e-Yuan remain in doubt.
Whether or not the Chinese e-Yuan will touch Bitcoin heights remains to be seen. Considering all the hype it has garnered in the past few years, the Chinese e-Yuan is sure going to be a darling of the crypto realm.
Chinese e-Yuan is the elixir world needs?
China’s rising debt is posing a hindrance to its growth. Currently, the bad loan problem of China stands at $341 billion and is a result of local collateral-related issues. This is not healthy debt but a rather bad debt that can lead to an international rating downgrade. The Chinese e-Yuan can help solve the mounting debt issue.
Smart contracts will allow the Chinese authorities to track assets and eliminate bad debt arising out of multiple collaterals. The liabilities can be traced much more effectively. Initially, the cryptocurrency will be tightly regulated by the state, and only verified entities will be given transaction permissions.
Bitcoin not in the danger zone, not yet
It is not clear whether physical assets will be used to back the cryptocurrency. Recently, china bought a significant amount of gold to support its fiat. In all likelihood, the Chinese government would back the crypto with physical assets if it notices any significant drops in the new currency’s value.
Interestingly, technology stocks of China have risen post the e-Yuan announcement. Foreign entities have spent close to $26.99 billion on purchasing technology companies listed on Shenzen stock exchange. Even though it is state-backed and not truly decentralized, the Chinese e-Yuan can give fierce competition to Bitcoin in the future.
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