After banning all crypto-related activities in September last year, China launched the pilot of its Digital Yuan or e-CNY back in January this year. In the last five months, the world’s second largest economy has been taking measures to get more citizens to use its CBDC.
The Shenzhen Municipal Bureau of Commerce will be partnering with several banks for the distribution of the digital currency in the form of ‘red envelopes’ through a ‘lottery process’ to its residents.
“With the Dragon Boat Festival, the traditional peak season of consumption, is approaching, Shenzhen residents welcome a splendid gift package of consumption. As a part of Shenzhen’s consumption promotion policy ‘Combo Boxing’, Shenzhen will distribute 30 million yuan of digital RMB red envelopes through the Meituan platform to boost people’s livelihood consumption,” said an official press release by the Shenzhen government.
The people of Shenzen will be able to use their e-CNY tokens for the purchase of food, clothing, housing, and transportation.
The development comes a month after China’s central bank added ten cities to launch the pilot CBDC in.
“Many consumers expressed their hope to use [e-CNY] red envelopes in more online and offline consumption scenarios,” the press release noted.
In fact, just recently, Beijing’s satellite city named XiongAn New Area had launched a similar campaign to give out 50 million digital yuan as gifts to the residents.
A Reuters report said China should increase the amount they’re ‘gifting’ people via e-CNY tokens, citing economy experts.
Along with making the e-CNY a daily-payment alternative in China, President Xi Zinping’s government also aims to position e-CNY as a payment option for international transactions.
Meanwhile, China is tightening the noose around illegal crypto activities happening in its region despite strict prohibiting orders.
In February this year, the country imposed a fresh ban on raising funds using ‘virtual currency’, deeming the activity illegal.
Chinese authorities are also combing the regional geography to identify illegal crypto mining hubs. Tracing down areas with regular electricity shortages, Chinese officials have been conducting raids.
In March, a crypto mining centre was busted in China’s Guangdong Province. The facility had consumed over 90,000 kilowatts of electricity after having been operational for over 1,000 hours.
Not just cryptocurrencies, China is also closely monitoring the movement of non-fungible tokens (NFTs) in order to safeguard people from financial risks associated with digital assets.
Three organisations have come together in China to focus on NFTs. These organisations are, the China Banking Association, the China Internet Finance Association, and the Securities Association of China. The group aims to shape up the NFT sector in a way to reduce the chances of them being used as tools to process illicit activities like money laundering.