A total of three big companies are now reported to be involved in testing the China’s digital yuan rollout.
Set to become the first major central bank digital currency, the digital yuan will be tested by food delivery giant Meituan Dianping, sources told Bloomberg on July 14. It joins ride-hailing firm Didi Chuxing in the experimental rollout of China’s Digital Currency Electronic Payment (DCEP) system. Bloomberg added that the People’s Bank of China (PBoC) is also in talks with streaming video company BiliBili.
The PBoC announced in April that its central bank digital currency trial would be in four cities: Shenzhen, Chengdu, Suzhou, and Xiong’an.
Both Meituan and BiliBili are backed by Tencent, whose WeChat Pay—along with Alibaba’s AliPay—controls the vast majority of China’s widely used digital payments.
All three of the three test companies process billions of dollars in small daily transactions, and have their hand in other business areas.
That means the DCEP’s test rollout will be available on services used by a huge number of people for small, day-to-day transactions. That will both provide a trial by fire and familiarize a broad swath of the population with the system.
It also means the digital yuan rollout will get Beijing’s foot in the door with even more potential surveillance sources, with ride-sharing tracing movements and streaming video payments providing another tool in the Great Firewall’s internet tracking toolbelt.
Acknowledging that citizens might be dissuaded from using a digital yuan in which every transaction goes through the government, PBOC head Mu Changchun said in November, “we will give those people who demand it anonymity in their transactions.”
But, he added, “at the same time we will keep the balance between the ‘controllable anonymity’ and anti-money laundering, CTF [counter terrorist financing], and also tax issues, online gambling, and any electronic criminal activities.”
The idea of ‘controllable anonymity’ doesn’t make sense CipherTrace Chief Financial Analyst John Jefferies told Modern Consensus at the time.
“‘Controllable anonymity’ sounds like an oxymoron similar to ‘noncommittal monogamy,’” he said via email. “The real question is, who will ‘control’ the anonymity, the government or the individual? The transactions may be anonymous between individuals conducting the transactions but transparent to the government of China.
“If the CBDC rather than the users’ ‘control’ the anonymity, then the illusion of anonymity is false and users’ privacy may be sacrificed at will. Clearly, ‘built-in’ trackability has the potential for abuse by oppressive governments.”
Jefferies added that it’s important to know the difference between privacy and anonymity. “Privacy is when you do not want other people to know what you are doing,” said Jefferies. “Anonymity is when you don’t mind if people know what you are doing, you just don’t want people to know that it is you.”
Updated at 5:04 p.m. on July 16, 2020 to correct John Jefferies name.