China to expand its digital yuan trial and increase NFT oversight

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(Kitco News) – Despite the blanket ban on cryptocurrency activities like mining and trading in China, the country remains at the forefront of developing and regulating the nascent asset class as blockchain technology continues to be integrated across Chinese society.

Creating a central bank digital currency (CBDC) is one area where China is clearly at the head of the pack, having already begun pilot testing for a digital yuan in 17 provinces, which includes 26 large cities and 5.6 million merchants.

An update released by the People’s Bank of China (PBoC) on Monday indicates that the bank plans to continue expanding the pilot program to allow for additional testing and exploration of the possible applications of a digital RMB throughout the country.

The stated goal of the PBoC is to “continue to carry out innovative applications of digital renminbi to realize the interconnection between the digital renminbi system and traditional electronic payment tools.”

Ultimately, the central bank wants to develop a system where users can “scan with one code” while merchants can support as many types of transactions as possible while minimizing the increase in costs to customers.

As part of its efforts to increase adoption, the PBoC has hosted 30 “red envelope activities” in pilot areas where citizens are airdropped small amounts of the e-CNY that can be used to make online and offline purchases. The central bank plans to continue hosting such events to promote the digital yuan and encourage its use.

NFT oversight

Authorities in the Hainan province posted a public notice on Sunday in which they vowed to increase their oversight of non-fungible tokens (NFT) due to the inherent risks of fraud, money laundering and illegal fundraising that the sector poses.

The memo, which was released by the Hainan market regulator and nine other agencies, called on the relevant city and county departments to “increase their supervision of the digital collection industry and guide market entities to operate legally and in full compliance.” This will help local authorities monitor and prevent financial risks related to digital collectible trading platforms in their respective regions.

Measures recommended to help mitigate the risks of digital collectibles include regulating market access and administrative licensing management, eliminating false propaganda, investigating and adjudicating incidents of consumer fraud, the comprehensive prevention of copyright infringement and ideological security risks, supporting data security, preventing financial risks, and strengthening public education.

According to the notice, digital collectible firms are required to register with relevant authorities or go through a review and approval process that assesses their artwork and internet and blockchain information management rules.

The stated goal in helping to guide the growth of the NFT industry in Hainan is to empower its tourism and culture sectors as the region develops its free trade port, which was originally announced by the State Council of China in 2018. Ultimately, China hopes to turn the region into a free-trade zone, making it a commercial gateway to the Pacific and Indian Oceans.