U.S. Sen. Pat Toomey (R-PA) is asking U.S. authorities to closely watch China’s new central bank digital currency (CBDC) for how it might affect U.S. economic and national security interests.
China debuted its new digital yuan at the opening of the Beijing Winter Olympics last Friday.
“While the United States is still evaluating the concept of a digital dollar, China is using the Beijing Winter Olympics as an international test for the digital yuan (eCNY), which has been piloted domestically since 2019. In the Olympic Village, athletes and visitors will only be permitted to transact in cash, Visa, and eCNY. Ahead of the games, the Chinese government is reportedly pressing U.S. companies like McDonald’s, Visa, and Nike to install eCNY systems,” Toomey, ranking member on the Senate Finance Committee, wrote in a letter to Treasury Secretary Janet Yellen and Secretary of State Antony Blinken.
China has also launched the first state-backed global distributed ledger infrastructure, the Blockchain-based Services Network (BSN), Toomey said. It is designed to be the state-controlled blockchain internet and technological backbone of China’s Belt and Road Initiative. Toomey warned that Beijing’s CBDC and BSN could undermine economic and national security. He cited eCNY’s potential to subvert U.S. sanctions, facilitate illicit money flows, enhance China’s surveillance capabilities, and provide Beijing with ‘first mover’ advantages like setting standards in cross-border digital payments.
“Though the Chinese Communist Party appears determined to leverage the technology underlying digital assets, Chinese regulators have banned cryptocurrency activities in mainland China, viewing decentralized and permissionless network money as a threat to Beijing’s digital authoritarianism,” Toomey wrote. “China’s crackdown presents an opportunity for the United States to be the forerunner of crypto innovation, grounded in individual freedom, and other American and democratic principles.”
Toomey asked the Treasury and State departments to closely examine Beijing’s CBDC rollout during the Olympic Games and provide a full briefing by March 7.