Nine U.S. senators are backing a bill that aims to crack down on China’s central bank digital currency (CBDC), the e-CNY or digital yuan, which they claim could allow Russia to bypass financial sanctions imposed on its banks and entities.
See related article: Digital yuan pilot attracts Chinese province bordering Russia
Fast facts
- “If left unchecked, technologies including China’s Digital Yuan will empower Russia to evade global sanctions on systems such as SWIFT and enable the [Chinese Communist Party] to further surveil and threaten their citizens,” Senator Marsha Blackburn (R-Tennessee) said in a statement on Wednesday.
- BitMint CEO Amnon Samid, who participated in developing retail CBDC trials for China, told Forkast that at this stage China may propose to Russia to deploy the digital yuan for settling transactions in yuan on both sides of the border, but “it cannot serve as a substitute to the SWIFT system.”
- The act would require the Department of State to issue a warning against the digital yuan.
- China’s state-backed Blockchain-based Service Network (BSN) is also under fire, as the bill proposes the U.S. government examine the blockchain infrastructure’s privacy implications.
- “The bill would have no impact on China’s e-CNY which is still in trial,” Richard Turrin told Forkast, a Shanghai-based fintech consultant, adding that international users for the digital yuan will most likely be within China’s Belt and Road Initiative or the RCEP, and the bill would have little meaningful impact.
See related article: Hong Kong makes apt testbed for e-CNY cross-border use