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China to Extend Digital Yuan Test as Russia Invasion Highlights Crypto’s Potential Role

China to Extend Digital Yuan Test

The government is on the verge of authorizing trials of the central bank’s digital currency in a number of towns and regions.

Bitcoin and other major cryptocurrencies fell on a gloomy Thursday in Ukraine.

Bitcoin was selling at over $42,500 at the time of writing, down more than 3% in the preceding 24 hours. Ether, the second-largest cryptocurrency by market value, was trading at around $2,800, down nearly 4% from the previous day. The majority of the other cryptos in CoinDesk’s top 20 by market cap were in the red.

Russian forces seized Kherson, a port city in southern Ukraine with a population of roughly 300,000 people and a ship-building industry, and continued to seize vast swaths of the region because of its proximity to the Black Sea.

Rockets and cluster bombs rained down on Ukraine’s major cities, and over one million people evacuated the now-war-torn nation, including Asian students and workers.

Meanwhile, as cryptocurrency and other donations flooded into the country, the Biden Administration demanded $10 billion in humanitarian and defense aid and placed further sanctions on Russia. The cyberattack on a sovereign government has shone a focus on cryptocurrency’s potential as a means of conducting transactions outside of regular financial services networks.

Earlier this week, investors were excited about this development. However, enthusiasm has waned as investors have shied away from riskier assets in the last two days.

Central bank Digital currency of China

China Increases Testing of Digital Yuan; India Changes Crypto Definition

Russia’s financial isolation, as well as the influx of bitcoin donations into Ukraine, have heightened interest in governments’ crypto projects and the potential significance of digital assets.

A proponent of growth According to Reuters, China, probably a larger competitor to the US-led rules-based system than Russia, “will shortly approve a third batch of cities prepared to conduct trials of its digital yuan currency,” citing state-backed financial outlet Securities Times. According to the newspaper, “a number of cities and regions have requested to authorities for authorization to test digital yuan,” including Guangzhou, Chongqing, Fuzhou, and Xiamen.

 

Meanwhile, the South China Morning Post reported that “Western sanctions imposed on Russia following the invasion of Ukraine, including exclusion from the SWIFT financial messaging system, may offer new development opportunities for China’s digital currency and its home-grown yuan cross-border payment system.”

 

However, China’s crypto narrative appears to be centered 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 proportion of bitcoin transactions has dropped by 80 percentage points since the government’s crackdown.

 

China’s crypto narrative looks to be growing again, just as Ukraine sparked significant interest in crypto adoption by offering an airdrop for contributions, a first for a country. It had to be cancelled after it was discovered that a third party was spoofing the much-anticipated event.

 

According to Mykhailo Fedorov, Ukraine’s minister of digital transformation, Ukraine will shortly introduce NFTs (non-fungible tokens) to help Ukrainian Armed Forces.

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