Yifan He, CEO of Red Date Technology: China will not Recognize Cryptocurrencies as Legal Tender in the Next 5–10 Years

By Xu Xiaomei, Ran Xuedong, translated by BSN International Team
Source: China Times

Abstract: Yifan He, CEO of Red Date Technology and the executive director of the BSN Development Association said at the 2020 Industrial Blockchain Summit of China that China will not recognize cryptocurrencies as legal tender in the next 5–10 years. With the advent of legally issued digital RMB or Central Bank Digital Currency (CBDC), the velocity of circulation of the commodity will increase at least 3–5 times. If the use of digital currency for business-to-business transfers is liberalized, it will have significant impacts on the whole economy.

On October 23, the 2020 Industrial Blockchain Summit of China was held in Beijing. The event is co-hosted by China Times, China Times Financial Research Institute, and Cointelegraph China. Mr. Yifan He, CEO of Red Date Technology said at the summit that China will not recognize cryptocurrencies as legal tender in the next 5–10 years. At this stage, only the central bank digital RMB or CBDC for short is allowed in China. With the advent of legally issued digital RMB, the velocity of money/commodity circulation will increase at least 3–5 times. If the digital currency starts to be used for transfers and settlements in all business-to-business scenarios, it will dramatically improve the efficiency of the current financial system, thus driving the whole digital economy.

As an emerging technology, blockchain has been adopted and elevated as China’s national strategy to support the informatization and digitalization of the whole country, as the technology features some tremendous benefits including immutable data sharing, transparency, enhanced security, and traceability.

At present, China has a strong demand and a huge market for permissioned blockchains, which are consortium and private blockchains, according to Mr. He. The application scenarios of blockchain have covered the fields of agriculture, manufacturing, medical care, government affairs, etc. In his speech, Mr. He further noted, “Industrial applications of blockchain technology has begun to emerge as the most feasible way to promote the implementation of the technology in the short run. Blockchain technology has improved operational performance and increased revenues in industries such as processing, logistics, etc.”

To accelerate the development of blockchain technology and spike innovations, Mr. He stated that the key is to massively drive down the cost and achieve data interoperability across heterogeneous frameworks and IT systems, as the two are the major obstacles faced by the industry.

The Blockchain-based Service Network (BSN) founded by State Information Center of China, China Mobile, China Union Pay, and Red Date Technology is a global blockchain infrastructure that aims to tackle the two challenges to build “the Internet of Blockchains”. BSN has been integrating major permissioned and permissionless/public chains into its ecosystems, working with cloud service providers and other technical partners to provide a standard and unified blockchain resource environment. Due to the stringent regulations over cryptocurrencies by the Chinese government, public chains are being integrated with BSN International and they cannot provide services in China legally. Compared to permissioned blockchains, permissionless/public chains have many advantageous features and are playing an irreplaceable role in the global blockchain community.

To allow public chain services to enter China legally, BSN has recently announced a ground-breaking project the Open Permissioned Blockchain (OPB) Initiative which modifies permissionless chains to permissioned ones, satisfying the requirements of high-level security, privacy, and supervision. This is a major leap forward and a thrilling moment for the blockchain industry since public chain operators have been struggling for years trying to break the bottlenecks. On the other hand, Chinese corporations were also looking for effective solutions to embrace public chain technology. The OPB initiative allows public chains to scale up and thrive in China.

With the launch of the CBDC, permissioned frameworks in BSN can be integrated and innovated based on the CBDC system to establish a complete set of the DeFi system in China.

According to Mr. He, with China’s rise of leadership in CBDC and the adoption of blockchain technology, permissioned frameworks maintaining the features of privacy and security will become the mainstream, shaping a new ecosystem in China. The trend has become very clear after the first open permissioned blockchain launched by Ant Group. Baidu and the Chinese Academy of Telecommunication Research Institute have also launched open permissioned blockchains after that.

To conclude, CBDC shall prevail as the only legitimate digital currency in China and permissioned chain services are in great demand to build the new financial infrastructure to empower the CBDC. On the other hand, for industrial applications, permissioned chain services have seen a rapidly growing market in China and would become the mainstream among the others. For further information and general inquiries, please contact info@bsnbase.com