China gears up to launch its own cryptocurrency
New legislation passed on cryptography as state aims to keep control of money supply
China has passed a law on cryptography as the country gears up to launch its own digital currency.
The legislation, which comes into effect next January, is aimed at helping to develop cyber business and security. It ensures state supports for research and guarantees confidentiality.
China has been looking at introducing a cryptocurrency since 2014 as a way to cut the costs of circulating paper money and boosting policymakers’ control of money supply, according to reports.
It is expected that the proposed digital currency would be similar to Facebook’s Libra and could be used across major payment platforms. Libra will be backed by a reserve of real assets such as bank deposits and short-term government securities. This structure aims to foster trust and stabilise the price.
However, Facebook’s proposal has raised concerns among regulators as, due to its global reach, it could emerge as the dominant form of digital payment and become a channel for money laundering.
Because cryptocurrencies are based on a blockchain, there is no state – or any – regulation. Blockchain allows digital information to be distributed, but not copied. The data is stored in multiple locations – linked together – so no records can be altered. Any changes would be apparent as the mirrored versions would remain unaltered.