Three U.S. senators yesterday wrote to the country’s Olympic & Paralympic Committee to urge it to “forbid American athletes from receiving or using digital yuan during the Beijing Olympics,” due to privacy concerns. 

In the joint letter, senators Marsha Blackburn, Roger Wicker and Cynthia Lummis wrote: “The digital yuan is entirely controlled by the [People’s Bank of China]”, adding that the details of what and where someone used the currency could be tracked and traced by the central bank.  

The senators warned that the digital yuan would be used as a tool to surveil Chinese and also visitors to China. Citing the example of WeChat, China’s most popular instant messaging app, they said their concerns were not hypothetical, as WeChat was “already being used to surveil, threaten, and arrest Chinese citizens.”

The joint letter came as the bank released the first white paper on its central bank digital currency.  

The state-backed digital currency, known as e-CNY, has undergone about 14 rounds of large-scale tests in nine major cities in China. Nearly 21 million personal wallets have been opened and transactions worth a total of around 34.5 billion yuan (US$5.3 billion) completed.  

Many Chinese experts predict that the 2022 Winter Olympic Games will usher in the official launch of e-CNY. Digital yuan developments focused on the event have been ongoing since last year. 

In late 2020, state-owned commercial banks tested wearable digital yuan wallets, including a ski glove version. State-controlled Xinhua News Agency reported that “more [e-CNY] wallets and payment options will be provided to the athletes, coaches and also audiences during the Beijing Winter Olympics.” 

In May, a prototype digital yuan ATM was showcased at the China Digital Summit. The machine allowed users to exchange 17 foreign currencies for digital yuan. China envisions that foreigners holding passports will be able to use its services and obtain visualization chip wallets in the future. 

In June, Beijing gave away free digital yuan that could be used at over 200 vendors in Shijingshan, a site located in the west of Beijing that will be a Winter Olympics location. 

As the white paper notes, e-CNY is not a 100% anonymous system, but supports “managed anonymity,” meaning that it involves tiers of digital yuan wallets with different payment maximum holdings and other limits, based on know-your-customer considerations. 

The paper said: “It aims to meet public demand for anonymous low-value payment services … Meanwhile, it is necessary to guard against the misuse of e-CNY in illegal and criminal activities such as tele-fraud, internet gambling, money laundering and tax evasion.” 

Another concern the U.S. senators might not have looked into is the potential use of biometric information by digital yuan wallets. 

In May, Chutian Dragon, a Chinese smart-card manufacturer, announced it would cooperate with Norwegian biotech company IDEX Biometrics to build a new version of the digital yuan wallet with a fingerprint sensor embedded in it. Chutian Dragon has already started to work on the card-borne fingerprint sensor and has produced a small number of wallets.