• China’s CBDC would weaken the US sanctions

    • China’s CBDC can actively assist the country in achieving global dominance.
    • The Chinese government’s stance on cryptocurrency has heightened geopolitical tensions and pushed up commodity prices.
    • Bitcoin and other cryptocurrencies are not considered legal tender in the country.
    • The Chinese government appears to be wary of virtual currencies, but it has embraced blockchain technology.

    CBDC, or the central bank’s digital currency, is being researched by almost all central banks around the world. China is one of the first countries to embrace blockchain technology and launch its national digital currency. Despite the fact that the country has embraced the technology behind Bitcoin, the cryptocurrency is still in its infancy. The cryptosphere witnessed a major crash in the crypto market in mid-May. The latest Chinese crackdown is one of the major causes of the crash. Such a move came at a time of widespread insecurity as a result of the global COVID-19 pandemic.

    China’s stance heightened geopolitical tensions.

    The measure of tightening cryptocurrency activity following the introduction of its CBDC sparked a sell-off of digital currencies. As a result of the measures, geopolitical tensions and commodity prices have risen. The measures were implemented at a time when the market for several digital assets was on a roll.

    It has been observed that digital currencies have outperformed and shown unstoppable growth. Such patterns point to the formation of a bubble, which causes the commodity market to become volatile.

    However, this was not the first time the country attempted to dominate its domestic digital asset market. Indeed, we have seen a gradual evolution of the country’s relationship with cryptocurrency over the last few years.

    CBDC is only a legal tender in China.

    According to the country’s stance, cryptocurrencies are not considered legal tender in China. As a result, neither the flagship cryptocurrency nor the traditional banking system accepts it. Notably, the Chinese government has classified Bitcoin as a virtual commodity.

    China appears to be wary of cryptocurrencies.

    Based on the various prohibition methods used by China’s financial regulators, it appears that the government is wary of such assets. Nonetheless, with the country embracing blockchain technology, it appears that the aforementioned factor is not correct.

    The government is currently considering the issuance of its CBDC. And is actively working to achieve global dominance in the digital field. As a result, the nation’s successful measures would reduce the ability of US sanctions and blockades.

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