Top cryptocurrency news: Chinese official explains why CBDC should not be as anonymous as cash
According to the head of the People's Bank of China (PBoC) digital currency institution, China's central bank digital currency (CBDC) shouldn’t be as anonymous as cash.
According to a local media outlet, on July 24, the head of the Digital Yuan project Mu Changchun discussed the central bank digital currency (CBDC) project in China at the 5th Digital China Construction Summit.
The Chinese central bank has never intended for the project to be completely anonymous since the launch of the digital yuan in 2020, Mu remarked at the event. The official said that in order to adhere to international Anti-Money Laundering (AML) regulations, PBoC has been trying to only allow for a limited amount of anonymity.
According to Mu, Chinese authorities should be authorized to examine CBDC data on people accused of crimes. However, according to the official, partial anonymity is a crucial component of the digital yuan initiative since it protects transaction privacy and personal information.
However, a wholly anonymous CBDC would impede the prevention of crimes such as money laundering, terrorism funding, tax evasion, and others, he added.
“While cash is associated with more privacy, it is less mobile and difficult to utilize in big amounts than digital currency,” according to Mu. “Carrying cash creates additional barriers for money laundering and terrorism financing. As a result, the tolerance for currency anonymity is rather low,” according to the official, who added:
“The digital currency issued by the central bank is more portable. It will considerably facilitate criminal activities such as money laundering if it gives the same anonymity as cash. As a result, the central bank's digital currency should not be as anonymous as cash.”
Mu went on to say that authorities risk facing major consequences if they solely focus on privacy protection and disregard the concerns linked with financial crimes. “Freedom without limits is not genuine freedom,” he stressed.
Despite rejecting anonymous online financial transactions, the PBoC has continued to work to protect the privacy of the digital yuan. According to PBoC governor Yi Gang, the digital yuan aspires to be more secure than payment applications.
The question of user privacy has surfaced as one of the most serious challenges related to CBDC initiatives throughout the world. Regulators were perplexed as to how to protect digital privacy while simultaneously tracking transactions to avoid illegal financial activities.
Read also: China's central bank will increase its digital-currency deployment
