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China leads the world with new state-backed digital currency

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In a push to dominate global financial technology, the Chinese government is aiming to roll out the world’s first state-backed digital currency.

Why it matters: China’s new currency could set global standards for the use of national digital currencies — and give Beijing unprecedented visibility and control over domestic financial transactions.


  • At least 60 countries are exploring the use of an official digital currency, but China is furthest along in making those plans a reality, while the U.S. has largely sat on the sidelines.

What’s happening: The Chinese government has started pilot programs in Beijing, Shanghai, and other cities that give small amounts of the currency, known as the Digital Currency Electronic Payment (DCEP), to residents on a lottery system, with a limited number of retailers participating.

  • Chinese officials have stated they hope DCEP is ready for wider use in time for the Beijing Olympics in February 2022.
  • Some officials also hope DCEP could help internationalize China’s currency, though China’s tight capital controls have made the renminbi less attractive for international transactions.

The big picture: Rolling out a national digital currency offers several advantages.

  • Improving efficiency in the financial system. Cash and coins are inefficient and expensive to store.
  • Reducing systemic risk. “The existing system is owned by private companies. Should Alipay or WeChat pay [go] bankrupt, which is extremely unlikely, it creates systematic risk,” Trivium China analyst Linghao Bao told CNBC. A government alternative would provide a layer of security.
  • Spurring innovation. A state-backed digital currency could potentially provide a host of new opportunities for businesses, tech companies, and trade.

But it isn’t just about efficiency and innovation. Chinese officials have made it clear that they view the digital currency as a key staging ground for global geopolitical competition, according to a January report by Yaya Fanusie and Emily Jin of the Center for a New American Security.

  • “Fintech is the commanding heights of future global financial competition,” Chinese central bank vice-governor Fan Yifei said in November 2019. “Whoever grasps this advanced productive capability will possess the strongest core competitiveness in finance.”

Background: Cryptocurrencies like Bitcoin and Ethereum exist on a decentralized ledger and are intended to skirt controls by governments or companies. But DCEP would be managed directly by China’s central bank, the People’s Bank of China (PBOC).

  • Chinese officials have said DCEP offers “controllable anonymity” — meaning payments could be anonymous to companies and other users but not to the government.

In the hands of an authoritarian government, a digital currency also offers unprecedented surveillance and control. “Never before has a government ever had access to individual user transactions directly. Technology hasn’t allowed that,” Fanusie told Axios.

  • “DCEP offers a direct route for the government to cut a person off from payments, from their funds, from their accounts. Right now, the government has to go through a private company or a bank to do that.”
  • This capability could be used to reduce criminal abuse of the financial system, but also in theory to monitor and shut down the accounts of dissidents, human rights activists, persecuted groups such as Uyghurs, and others engaging in non-criminal behavior that the Chinese Communist Party may want to suppress.

What to watch: Though DCEP could help internationalize the renminbi to a moderate degree, it’s unlikely to challenge the U.S. dollar any time soon.

  • But international DCEP transactions could bypass SWIFT, the most widely used international payments system, making it easier for people and governments to evade U.S. financial sanctions.

Go deeper: What central bank digital currencies mean for crypto

Source: https://www.axios.com/china-digital-currency-dd20ff05-7562-4e10-966e-43caf00e629e.html
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The Article Was Written/Published By: Bethany Allen-Ebrahimian

Facebook’s Long-Stalled Digital Currency Could be Tested This Year: Report

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Facebook hopes to launch a trial of its long-stalled digital currency project by the end of this year, according to a new report from CNBC. The currency, first announced in 2019 as Libra and then renamed Diem after some bad publicity, will now be pegged to the U.S. dollar, provided the tech giant can actually get it…

Read more…

Source: https://gizmodo.com/facebooks-long-stalled-digital-currency-could-be-tested-1846719510
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The Article Was Written/Published By: Matt Novak

Venmo Launches Ability to Buy, Sell, and Hold Cryptocurrencies Like Bitcoin

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Payment app Venmo will now let users buy, sell, and hold four cryptocurrencies, including bitcoin, ethereum, litecoin and bitcoin cash, according to a press release from the company Tuesday morning. But users won’t be able to send cryptocurrencies like bitcoin to their Venmo friends just yet.

Read more…

Source: https://gizmodo.com/venmo-launches-ability-to-buy-sell-and-hold-cryptocur-1846719679
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The Article Was Written/Published By: Matt Novak

Mastercard will support cryptocurrency payments later this year

7f983920-6c53-11eb-bfe3-0f4a19bb87c0Mastercard has become the latest payment company to give cryptocurrencies its blessing. The financial services firm has begun preparations to support select cryptocurrencies later this year, Mastercard’s digital asset and blockchain VP Raj Dhamodhara…

Source: https://www.engadget.com/mastercard-cryptocurrency-support-113518862.html
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PayPal says all users in U.S. can now buy, hold and sell cryptocurrencies

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PayPal announced today it’s dropping the waitlist to buy, hold and sell cryptocurrency in the U.S. With the move, all customers in the U.S. will be able to purchase cryptocurrency directly from within their PayPal accounts. U.S. customers will also be alerted to the new feature through both an email and a push notification in the coming days, the company says.

The feature was already partially available in the U.S. before today, but PayPal had been onboarding interested customers via a waitlist.

With the update, users will no longer have to wait for a spot to open,

In addition, PayPal says that due to initial demand from its customers, it’s increasing its weekly cryptocurrency purchase limit from $10K per week to $20K per week.

In October, PayPal had first announced its plans to enter the cryptocurrency market by way of a partnership with cryptocurrency company Paxos. This partner helps to power the new service for PayPal, enabling its customers to buy, sell and hold a range of cryptocurrencies —  initially including Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

By next year, PayPal plans to allow users to make PayPal purchases with cryptocurrencies as well, the company has said..

In terms of exchange rates, PayPal will charge $0.50 USD on transactions up to $24.99 USD, 2.3% on transactions from $25 to $100 USD; 2.0% on transactions from $100.01 to $200 USD; $1.80% on transactions of $200.01 to $1,000 USD; and 1.5% on transactions over $1,000 USD.

PayPal notes there are no fees for holding crypto in your account. And, to get things started, PayPal is waiving fees until 2021.

The company somewhat quietly disclosed the news today via an update to last month’s press release. It says users can download the PayPal app or log in to their PayPal account to learn more.

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Source: https://techcrunch.com/2020/11/12/paypal-says-all-users-in-u-s-can-now-buy-hold-and-sell-cryptocurrencies/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29
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The Article Was Written/Published By: Sarah Perez

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