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China: Private Companies Preferred over Crypto Firms to Deliver Blockchain says PBoC Head

November 11, 2019

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China: Private Companies Preferred over Crypto Firms to Deliver Blockchain says PBoC Head

Well-established private companies are preferred over digital currency and blockchain firms in contributing to the infrastructure for China’s national digital currency DC/EP according to Mu Changchun, Deputy Director at the People’s Bank of China (PBoC), who spoke at the 10th Caixin Summit in Beijing earlier today, addressing the central bank’s ambitious plan to become the global leader in electronic payments.

Changchun, who previously stated that PBoC’s DC/EP (Digital Currency/Electronic Payments) is tailored for “small-scale retail high-frequency business scenarios” and that it won’t necessarily follow the traditional cryptocurrency trail, as it will be using a more sophisticated networking architecture, now says that private companies are welcome to participate in the development of the project as long as they are subject to regulations, supervision, and serve the public with high moral standards. 

When the first news broke about China’s plan to dominate the digital currency world, some insights suggested that it (DC/EP) would be deployed as soon as today, November 11th, Changchun responded to the news essentially labeling them as “speculations”, citing that the currency is nearly finished after 5 years of research and development, yet the exact date of its release is still unclear.  

According to local financial media outlet cs.com.cn, Mu Changchun revealed on Sunday that the People’s Bank of China is asking both the private and public sectors to collaborate in a joint effort in order to finalize the still-upcoming digital currency.

Accredited blockchain analysts, including Cao Yin believe that Changcung’s speech indicates that China’s central bank is more comfortable working with private internet and hi-tech giants on the matter instead of traditional domestic blockchain and/or digital currency companies such as NEO, or Binance. 

In addition, Cao Yin believes that Mu Changchun’s team will ‘categorize’ the private companies based on their blockchain experience, operating history, as well as their relations with the People’s Republic of China, implying that companies who acted against the ‘public interest’ will be categorically excluded from the candidates’ list.  

Many broader financial analysts suggest that the choice was mostly based on the fact that most direct blockchain and/or digital currency provider companies so far were focusing on fundraising, and sometimes involved in money laundering activity, and pyramid schemes, commonly known as Ponzi schemes, making these companies appear as ‘against the public interest’.

Changchun also said that other countries and central banks are welcome to examine cross-border payments as long as they’re planning on their own respective state-backed digital currencies. 

On one hand, this isn’t a surprise, as we already knew some of the private companies that are already involved in the distribution of DC/EP. The transparent list already includes Tenpay, WeChat, AliPay, and UnionPay, while more companies are expected to fill the list.

On the other hand, this is a blow in the guts for traditional cryptocurrency projects such as NEO, and BNB, who are Chinese, yet their own country cannot truly trust them.