China’s Digital Yuan Will Be Banned In US?

China’s Digital Yuan Will Be Banned In US?

The US Congress is taking steps to shield the country from the potentially negative consequences of the global adoption of China’s national digital currency.

On Wednesday, three Republican senators, Tom Cotton, Mike Braun, and Marco Rubio, proposed a bill to restrict the use of China’s central bank digital currency (CBDC) in the US.

The “Defending Americans from Authoritarian Digital Currencies Act” intends to ban the use of China’s digital currency payment system, e-CNY, for app stores and other uses in the United States.

According to the senators, the phrase “app store” refers to any publicly available website, software program, or other electronic service that distributes apps from third-party developers to users of computers, mobile devices, or other “general-purpose computing devices.”

App and software providers in the United States are prohibited from supporting or enabling e-CNY transactions, as well as any app that contains such transactions in the nation, according to the bill.

Senators reasoned that prohibiting China’s digital yuan from being used in the United States would let the country to avoid “direct control” and monitoring of users’ financial transactions.

Cotton, a noted supporter of the digital dollar initiative in the United States, expressly stated that a CBDC may be used to spy on people’s financial activities, saying:

“The Chinese Communist Party will use its digital currency to control and spy on anyone who uses it. We can’t give China that chance — the United States should reject China’s attempt to undermine our economy at its most basic level.”

“We cannot allow this authoritarian regime to use their state-controlled digital currency as an instrument to infiltrate our economy and the private information of American citizens,” senator Braun said.

“This is a major financial and surveillance risk that the United States cannot afford to make,” Rubio stated.

China was one of the first countries in the world to test its own digital currency, with the initial trials of the digital yuan beginning in April 2019. The Chinese government has been actively encouraging cross-border implementations of the digital yuan, engaging with central banks in Hong Kong, Singapore, and others, following repeated internal testing.

Historically, the Chinese CBDC has been seen as a national security danger by US officials. Another bill introduced in March sought to restrict the use of China’s digital yuan, which might be used to evade sanctions and compromise users’ personal information.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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