Watchdogs Likely to Impose Sanctions on China’s Digital Yuan
China has for some time now been in the development of a digital version of its native currency, the Digital Yuan. Possibly, the country could be the first to introduce a Central bank digital currency that could be adopted globally if the country allows.
One problem, however, is the regulating authorities all over the world, which have different regulations on crypto/digital currency-related activities. If China allows the coin to operate cross border, it would mean that investors will use it in completing international trades.
Will other watchdogs accept the use of the digital Yuan in their respective jurisdictions? This guide will look into the top regulating authorities and understand some of the possible sanctions that the Digital Yuan could face.
The United States Treasury
One country that has been seen to show strictness in crypto regulation in the United States. Primarily, the USA has no issue against crypto-assets and their circulation. However, the US treasury recently mentioned new regulations regarding crypto taxation, including the daily limits for the same.
The relationship between the United States and China has always been sour, with both countries imposing sanctions on products of the other. Social media platforms like Facebook, Twitter, and several others are not allowed to operate in China. Similarly, The US has banned multiple China-based products, including denying Huawei operations.
The Digital Chinese Yen could therefore see a lot of Barriers in the US. The US could be among the countries globally that will restrict or completely disallow the Digital Yuan’s transactions. Being one of the economic powerhouses, denying the Digital yuan could have vast problems to the Yen’s value.
FCA of The UK
The United kingdom FCA is another organization that poses a serious risk in the operation of the Chinese digital yen. FCA has been regulating crypto for years now in the United Kingdom, and their impact has been seen vastly in crypto. For instance, Binance exchange, one of the world’s top crypto-asset exchange networks, has been vastly sanctioned in the UK.
The FCA is one of the strictest regulatory authorities globally, and as such, the Digital yen could face serious sanctions. In the United Kingdom, anything considered e-money is regulated as a security token. Primarily, the digital Yuan is e-money; therefore, it can face several regulations in the country.
Therefore, the digital Yen by China will have to work under the primary FCA regulations of the UK. However, The FCA could allow for the use of the digital yen by its users but ensure adequate sanctions for consumer protection.
Another popular country when it comes to bitcoin and crypto in Japan. Many Japanese citizens have shown a deep interest in the crypto world. However, Japan has its own regulating body, the FSA, which regulates crypto matters.
In 2018, the FSA imposed serious sanctions and regulations on private crypto assets like Monero, Zcash, and the likes. However, although it’s assumed that there has always been a cold economic war between Japan and China, it’s unlikely that Japan will ban the Chinese Digital Yuan.
The Chinese market currently has over 1.3 billion people, making an excellent market for Japan-based products. Japan could be among the countries to adopt the Digital Yuan but impose little regulations.
South Africa’s IFWG
South Africa’s IFWG is a government agency setting up many policies that crypto-related firms must follow. Due to the issues in scams that led to losses of $4 billion, South African watchdogs took on the issue of digital currency seriously.
Crypto tokens are divided into three different types; security tokens, exchange/payment tokens, and utility tokens. However, the South African watchdog does not consider a digital representation of a sovereign currency as a crypto asset, and it, therefore, does not have any laws against it.
China and South Africa have enjoyed an excellent relationship over the past decade, including trade; thus, South Africa could accept Digital Yuan’s Circulation.
Russia is another country that has been seen to have a serious stance in crypto. In May, Russian president Putin publicly announced that they should stop all illegal cross-border crypto transfers.
The Russian government has not banned any crypto-assets. However, Russia as a country has never accepted the use of crypto as a mode of payment.
Therefore, it is unclear if Russia will accept its investors to use crypto for payments; however, it’s safe to assume that Russia may reduce the sanctions because both countries have a good relationship.
Where Crypto is Banned
Even with crypto’s excellent prospects and investment opportunities, several countries globally have imposed a crypto ban. Bolivia, Ecuador and Vietnam, Egypt, Nigeria, and many more have banned many BTC and crypto-related activities.
In the countries where cryptocurrency is banned, the Chinese digital yen, although sovereign, will have a hard time. Such countries will probably strictly ban the Yuan entrance and, as such, really affect its way.
As already mentioned, China is already taking steps to the launch of its CBDC. Therefore, the digital Yuan could be the first sovereign digital currency to accelerate in adoption. However, depending on the relationship between China and other countries, the Yuan could see lots of Sanctions.
Primarily, the US and other countries where crypto is banned could completely ban the Digital Yuan. It’s unclear what other countries like Japan, South Africa, Russia, and England will do. However, based on the look of things, all the countries will work to protect their citizens. If the Yuan poses any risk to the citizens, it could be banned in many countries.