John Ratcliffe, the director of US National Intelligence, have called the Digital Yuan a national security and raised concern on the Digital Dollar’s “lagging behind” in development
Director of US Intelligence have written a letter to SEC Chairman Jay Clayton a few weeks ago. In this letter he raised concerns on China’s influence over digital currencies. As of now, many of the largest exchanges and existing stablecoins are based in China, and over 65% of the mining hashrate belongs to Chinese crypto miners. He’s other concerns touched on the subject of China’s policy to monopolize the “digital money” industry, and to make it harder for the US innovative projects to compete.
Earlier this month, the President Donald Trump issued an order which prohibits the transactions between U.S. Citizens and companies linked to China’s PLA, warning that “the PRC exploits United States investors to finance the development and modernization of its military.” It’s likely that this order applied to Chinese-Linked Digital Currency Companies as well. Likely that was one of the factors why Binance recently has forbidden the U.S. citizens to use its services.
Success of digital yuan can pose a threat to the status of US Dollar in the world’s economy. Some other existing stablecoins are based in China’s Hong-Kong which gives China the upper hand in this race. For instance, there’s Tether’s USDT which has the ability to mint USD equivalent to use it as a trade tool on Chinese exchanges.
While the authority and technological advancements of the blockchain behind digital yuan is obvious, the existing digital economy sees digital yuan as a “surveillance coin” which keeps all the data on transactions to be monitored by the Chinese government.
Digital yuan is a blockchain based digital money solution which aims to become the new and fast way to transport daily transactions between Chinese citizens on the real world market. China was known for interest in experimenting with digital money in the past — many of its internal trades were made via apps like WeChat and QQ Wallet.
The step towards blockchain opens an unregulated doorway to international trade for the Chinese business. It took over ten years for governments to recognize the utility of crypto technologies for the traditional trade.