Russia’s financial sanctions, as well as the influx of bitcoin donations into Ukraine, have heightened the Chinese government’s interest in crypto projects and the potential significance of digital assets. As stated by state-backed financial outlet Securities Times, China, probably a larger competitor to the US-led rules-based system than Russia, plans to shortly approve a third batch of cities to conduct trials of its digital yuan currency. According to the newspaper, a number of cities and regions have requested authorization to test digital yuan, including Guangzhou, Chongqing, Fuzhou, and Xiamen.
Meanwhile, the South China Morning Post reported that Western sanctions imposed on Russia just after its invasion of Ukraine, such as isolation from the SWIFT financial messaging system, may open up new opportunities for China’s virtual currency and its home-grown yuan cross-border payment method.
An expert explained that it is vital and urgent to strongly push Yuan internationalisation, particularly the growth of the CIPS system (a Cross-Border Interbank Payment System set up to expand worldwide usage of China’s currency in trade settlements) and the digital yuan. However, China’s crypto narrative appears to be centred on its central bank’s digital currency, or e-yuan. According to a letter issued by the Chinese central bank’s Financial Stability Bureau, China’s percentage of bitcoin transactions has decreased.