What’s the deal with China’s government-backed cryptocurrency?

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You’ve been hearing about crypto from your friends, your colleagues, random Twitter posts, and TV shows like Billions. OK, we hear you, maybe you’ve been hearing a little too much. Making millions and billions overnight seems unrealistic, fantastical—and you’d be right to roll your eyes at the unicorn tales. Underneath the hype, however, is a steadily growing, regulated, and accredited arm of a growing economic system that is gaining some serious traction. This is true across the world, but especially in mainland China where the central bank and government are developing their own digital currency as a means of economic future-proofing. 

What is the Chinese coin?

No, it’s not made of gold or dragon’s breath, but yes, it’s a real, legitimate currency. It’s called the Central Bank Digital Currency (CBDC), which is issued by the government’s central bank, obviously. According to Coindesk, as of October this year, over 140 million people have opened CBDC accounts, transacting over S$13.4b! OK, so maybe the stuff you see on Billions isn’t entirely untrue. 

This is a significant turn for crypto globally, which has been around since 2009 but has struggled to find backing from local governments—in fact, is often met with opposition. In 2017, China even banned Initial Coin Offerings, which forced crypto platforms to close across the country.   

Today, you can even invest in the CBDC as a non-Chinese citizen. Cryptocurrency sales are relatively quick, and will only get better as China looks to convert their economy into a totally digital financial system. 

So, billions or bust? 

China is likely the first significant global economy to release a cryptocurrency backed by a central bank, but why is it safer than before? Simple, the government directly manages the assets and transactions to ensure a standardized experience for CBDC users. While this ironically goes against the fundamental philosophy of cryptocurrencies being decentralised, the state’s hand has resulted in significant growth. 

Only use authorised distributors

Scammers are literally everywhere—and this is especially true in the crypto space where regulation and oversight are extremely shaky in certain markets. Unregulated, unauthorised distributors are out there, looking to snatch up your savings with quick pump-and-dump schemes. You can’t do anything about that, but you can limit your transactions to authorised distributors. 

Yuan Pay Group is a government-approved distributor of the government-backed coin in China, and are authorised to buy and sell crypto in China. In official terms, you can use your fiat currency (the paper money in your wallet or bank account), to exchange for the Chinese coin. This is an important thing to remember, because authorised distributors are the only companies in China legally allowed to trade cryptocurrencies or build platforms for you to do it manually. 

Is this the future of the Chinese economy?

Hard to say, but it certainly seems like the government is making a strong push for that to be the reality—especially if it means getting to the finish line before their economic rivals on the global stage. The Chinese government has never before backed a cryptocurrency, until now. While this desire is driven largely by their goals of making China an entirely digital financial system, the benefit to investors—regardless of motivation—is potentially huge. 

Investors worldwide have focused their magnifying glasses on the government-backed coin, many of them speculating on whether it will catch on. 

Interested? Here’s a company that lets you trade the coin from home

Yuan Pay Group runs a user-friendly website that you can run on desktop and mobile devices —although there’s not yet a mobile app, so phone users will still need to access the website. The good news is that this can be done from anywhere in the world. 

The bottom line? All investments and trades carry inherent risks, but if you’re looking to dive into Chinese crypto, at least ensure that you’re doing it on an authorised platform. Also, don’t expect billions overnight—just enjoy the TV show for that fantasy.  

Coconuts Media is not a financial services company and does not provide financial advice. This article is a paid partnership with YuanPay Group and is meant for educational purposes only.

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