China Bans Cryptocurrencies: What This Means for Global Digital Currency 🌐

BEIJING, CHINA — China banned cryptocurrencies on Tuesday, 19 May. The ban forbids any financial institutions and payment companies from doing business related to cryptocurrencies. <br /><br />Markets responded negatively, and the move led to a plunge in cryptocurrency prices worldwide.<br /><br />Funny enough, the ban comes as China is testing out its own digital currency, called the DCEP, or "digital yuan". Here are the details:<br /><br />The South China Morning Post reports that China's sovereign digital currency, called the DCEP or Digital Currency Electronic Payment, is already undergoing trials. <br /><br />This so-called "digital yuan" is managed privately by the People's Bank Of China under a centralised system, which is the complete opposite of most forms of cryptocurrencies — which are designed to disperse power away from the government. <br /><br />Unlike cryptocurrencies, all transactions with the digital yuan would be completely traceable by the Chinese government. <br /><br />The database can be checked in real time and can be used to keep digital records and checks against citizens who have committed money laundering, tax evasions or similar offences. <br /><br />The DCEP will be used to simulate everyday banking activities; including payments, deposits and withdrawals from a digital wallet. <br /><br />Online payment services like Alipay and WeChat Pay are already popular payment methods in China, with mobile transactions accounting for four of every five payments in 2019.<br /> <br />China has made it clear so far that cryptocurrencies in their current form are unwelcome in the country. <br /><br />It warns its citizens against the wild speculation of cryptocurrencies, while pushing for a fully centralized digital currency that could give it unprecedented powers.