People’s Bank of China governor says Digital Yuan prioritizes privacy and crime prevention

On Monday, Governor of the People’s Bank of China (PBOC), Yi Gang, stated that the development of the digital yuan, the e-CNY, requires a “delicate balance” between user privacy protection and the prevention of illegal activities. In his lecture at the Hong Kong Fintech Week, Yi stated that the preservation of privacy is one of the top issues on the central bank’s agenda. 

Yi adds: “In designing e-CNY, [we] try to ensure privacy protection and financial security through, by and large, anonymity and managed anonymity” 

Yi’s remarks come when concerns over privacy and sovereign control are arising and putting the digital yuan under pressure. Notably, the US Senators introduced a bill to ban e-CNY in May this year. The central bank of China has emphasized numerous times that no CBDC in the world could possibly maintain perfect anonymity, in an effort to reassure people. 

Yi stressed: “anonymity and full disclosure are not as simple as black and white.” The PBOC governor acknowledged that the e-CNY is not a fully anonymous system but enables a tiered “managed anonymity” feature, which seemed to have been revealed in a recent police raid, in a white paper published in July 2021.

China records multiple e-CNY-linked illicit activities

Police arrested a criminal group in September who they claim exploited the CBDC in a nearly 200 million yuan’s (US$27.4 million) money laundering scheme. Notably, the country commenced its next phase of e-CNY testing in August, as TheCoinRise reported.

The author of “Cashless: China’s Digital Currency Revolution,” Richard Turrin, an expert of Shanghai-based fintech, informed Forkast in September by stating: 

“There is no practical way for a criminal to effectively launder the digital yuan, as the authorities could track transaction history if they obtain a warrant”. The author further adds: “These definitely are the world’s dumbest thieves.”

Although the central bank digital currency (CBDC) by China is known to be the most advanced among major economies in the world, it has experienced several e-CNY-related scams since its first money-laundering case from November 2021. According to reports, the authorities have been tracking digital yuan trails to investigate laundering and fraud cases in Jiangsu, Henan and Inner Mongolia.