1 ,' said Zennon Kapron, founder of Kapronasia, a Singapore-based fintech consulting service. 'Setting this up for data is probably the No. Instead of fixating on individual activities, the Chinese government is probably more interested in obtaining the troves of aggregated transaction data that a centrally-backed digital currency will generate. 'It's very scary in general, but if you consider how surveilled financial transactions already are in China, I just think it's not significantly more scary,' said Chorzempa. Records of financial activities, whether via the popular payment platforms Alipay and WeChat or via commercial bank-issued credit cards, can also be seized by the government if it wishes.įrom the individual user's perspective, they can still opt for cash if they want to keep a transaction secret, since physical cash is guaranteed to co-exist with its digital alternative for a long time to come. Federal Reserve, who said, 'It's one that really allows the government to see every payment for which it is used in real time.'īut that worry can be overblown, researchers told Protocol, since the e-CNY doesn't give the Chinese government much more power to surveil financial activities than it already enjoys. This has raised surveillance concerns from outside observers, including from Jerome Powell, chairman of the U.S. Theoretically, this means the government will have more insight into individual transactions if they happen in the form of e-CNY instead of cash. But telecoms are still legally obliged to surrender any data to police or court requests in China. Mu, the director-general, has said that telecom companies cannot provide identity data to institutions like the central bank.

That means any e-CNY transaction will be traceable back to a number, which in China is tied to an individual via their ID. Instead, every digital yuan wallet, physical or virtual, will be associated with a valid phone number. It's not like cash or the prepaid debit card people can buy anonymously at a local convenience store. In reality, the system is likely more 'pseudonymous' than anonymous, Martin Chorzempa, senior fellow at the Peterson Institute for International Economics, told Protocol. The only thing needed will be a valid phone number. In June, Mu Changchun, director-general of the Digital Currency Institute at the PBOC, said publicly that it will be possible for users to set up an anonymous account as long as their deposits do not exceed 10,000 RMB (or $1,540). The skinny: It's private payment companies, not individual users, who should worry most about their data being snatched by the state.įrom the very beginning, the PBOC has emphasized that the e-CNY will enable a certain level of anonymity to simulate the experience of using physical cash, a concept they call 'controllable anonymity' (可控匿名). Protocol talked to several e-CNY researchers about what the document tells us, especially who should really be concerned about the new digital currency. With the recent release of a digital yuan white paper by People's Bank of China, named 'Progress of Research & Development of E-CNY in China,' observers are finally getting some long-anticipated details on the project. It sounds scary, but it's probably not as significant as the senators make it sound. They say they are concerned with how the currency can be used as a tool to surveil its users. Republican senators called for a ban on American athletes using e-CNY during the 2022 Winter Olympics in Beijing. Which, come to think of it, is exactly what some fear the Chinese government will do to the e-CNY's users. Every step China takes with its centrally-backed digital currency - the e-CNY, also known as digital yuan or the Digital Currency Electronic Payment project - is closely watched.

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