Digital Yuan: Weapon in US Trade War or Attempt to Manipulate Bitcoin?

After a short stay in the red zone, Bitcoin (BTC) has recovered toward … to the U.S. dollar, such as Gemini Dollar (GUSD) and Paxos Standard (PAX).

After a short stay in the red zone, Bitcoin (BTC) has recovered toward $12,000, with traders turning bullish as ever. Experts call the United States-China trade war a key reason for the main cryptocurrency’s price fluctuations. Fuel to the fire has been added by the recent announcement by the People’s Bank of China (PBoC) of plans to get ahead of the U.S. and Facebook’s Libra by issuing a national cryptocurrency.

Chinese government is set to digitize yuan, challenge U.S. and Libra

As Cointelegraph reported, the PBoC plans to focus on developing its own legal digital currency. On Aug. 2, during a video conference devoted to discussing financial tasks for the second half of 2019, heads of financial and economic institutes in China touched upon the topic of cryptocurrencies. The country’s central bank announced its intention to accelerate the development of its own digital currency and also confirmed its plans to allocate more resources to the implementation of this task.

It is notable that the decision of the Chinese bank to intensify the creation of a national cryptocurrency was preceded by the hotly debated development of the Libra coin. Initiated by Facebook in 2019, the project is now actively being lobbied for in the U.S. government, but without any results so far.

Related: US Congress on Libra Overview: Trust, Privacy and Genocide Accusations

In July, Wang Xin, director of the PBoC Research Bureau, said that, with the development of the Libra cryptocurrency project, the People’s Bank of China should accelerate the growth of its own digital currency, which it has been working on over the past few years. Wang believes that the risks Libra bears for the traditional financial system will force regulators to devote many more resources and forces to develop its digital currency. Wang asked:

“If [Libra] is widely used for payments — cross-border payments in particular — would it be able to function like money and accordingly have a large influence on monetary policy, financial stability, and the international monetary system?”

In particular, China is concerned about which currencies Libra will be tied to and what role the U.S. dollar will play in this project. Wang said:

“If the digital currency is closely associated with the US dollar, it could create a scenario under which sovereign currencies would coexist with US dollar-centric digital currencies. But there would be in essence one boss, that is the US dollar and the United States. If so, it would bring a series of economic, financial and even international political consequences.”

Former PBoC Chairman Zhou Xiaochuan also believes that the concept of a global digital currency introduced by Facebook that can be exchanged into fiat money threatens existing cross-border payment systems and could weaken the position of national currencies, which he spoke about at a conference in Beijing, as reported by the South China Morning Post.

According to Zhou, Chinese authorities need to strengthen the national currency and consider the Hong Kong model to create a digital renminbi, which involves issuing money through commercial enterprises under the supervision of the central bank. Some analysts have already expressed the belief that technology giants Alibaba and Tencent may be assigned such a task. Large corporations in the country appear to be supportive of the ideas coming from government ​​members, as Huawei CEO Ren Zhengfei commented:

“China can just issue our own version of Libra. Why should we wait for others to do it? The power of a country is always stronger than that of an Internet company.”

Stablecoin to support the local economy

A future national cryptocurrency may be issued in the form of a stablecoin tied to the yuan (also called the renminbi). Researchers at the PBoC published a review of recent initiatives in this area back in October last year. Most of the coins discussed in the material are pegged to the U.S. dollar, such as Gemini Dollar (GUSD) and Paxos Standard (PAX). The researchers are convinced that the development of cryptocurrencies tied to USD strengthens the role of the dollar in the global monetary system, while also having a negative impact on other fiat currencies. According to the researchers:

“If the stablecoins tied to the U.S. dollar end up being widely recognized by the market and prove their applicability in the real economy, we will have to redouble our research efforts in this direction, as well as in studying the relevant experience. This is necessary to support local institutions and issue stablecoins tied to the renminbi.”

At the same time, the authors note that stablecoins still have a long way to go before the financial system begins to feel any significant influence from new assets. Star Xu, the founder of cryptocurrency exchange OKCoin, expressed a similar point of view in his post on Weibo, writing: “The dollar-pegged #stablecoin regulated by the US government will strengthen the penetration of the US dollar 100 fold.”

Bitcoin is growing due to the yuan’s rate falling

Analysts have drawn parallels between the declining rate of the yuan and Bitcoin’s growth. The price of the preeminent digital currency rose sharply the very moment when the Chinese currency fell by 7% to an 11-year low. On Aug. 5, Bitcoin’s price surged to $11,786, with the daily increase amounting to an 11% gain.

Correlation between yuan’s fall and Bitcoin’s surge

U.S. President Donald Trumpalleged on Twitter that the Chinese government is manipulating the price of the renminbi:

“China dropped the price of their currency to an almost a historic low. It’s called ‘currency manipulation.’ Are you listening Federal Reserve? This is a major violation which will greatly weaken China over time!”

As financial analysts suggest, the renminbi declined due to investors’ concerns about a new round of escalation in the trade war between China and the U.S. This happened a few days after Trump introduced additional tariffs on goods imported from China. Now that U.S. products could become more expensive for Chinese consumers, a lower exchange rate might adversely affect U.S. exporters. The prices of U.S. stock futures have already declined, while the cryptocurrency market has demonstrated the opposite tendency.

Some analysts have postulated that the reason for this dynamic could be because Chinese investors use Bitcoin as a means of saving money. Simon Peters, an analyst at trading platform eToro, suggested that Chinese investors could want to diversify as the yuan fell. According to Peters:

“Given that Chinese investors make up a large proportion of crypto investors, there’s a strong possibility some are backing bitcoin’s chances against the yuan.”

However, Peter Schiff, an economist and CEO of brokerage company Euro Pacific Capital, rejected this explanation, claiming it was more about speculation rather than about real need:

“CNBC is trying its best to dupe its audience into buying Bitcoin. Despite gold being a much larger market, CNBC devotes far more airtime to Bitcoin. The Chinese aren’t buying Bitcoin as a safe haven. Speculators are buying, betting that the Chinese will buy it as a safe haven!”

The internet says…

An ambiguous statement made by the PBoC regarding the creation of a national cryptocurrency has sparked intense discussion around the world. Several points of view, primarily negative, have appeared on the internet in response. Some users suggested that both the U.S. and China need cryptocurrency to strengthen control over their citizens. Crypto enthusiast Richard Heart opined:

“Nations want more control over their cirizens. Nothing new…or good.”

And some even suggested that the confrontation between China and the U.S. in the cryptocurrency field could lead to a world war.

Place your bets

How soon Chinese residents will be able to see — and most importantly use — the local digital cryptocurrency is still unknown, as it may take years to implement such an idea. The full process may require the development of a regulatory framework, instruments of taxation and regulation, as well as creating special entities and hiring specialists who will work with cryptocurrency.

Previously, attempts to create a national cryptocurrency have already been undertaken by countries such as Iran, Turkey, Saudi Arabia, Russia, Estonia and Venezuela. The South American country allegedly raised $1 billion during the presale of the supposedly oil-backed cryptocurrency Petro, and Venezuelan banks began to display the citizens’ account balance in the new currency. This year, Venezuela intends to make Petro OPEC’s main digital currency, according to Oil Minister Manuel Quevedo.

Related: Venezuelan Petro Against US Sanctions: History and Use of the Crypto

In regard to China, such an initiative has been discussed since January of 2016, when representatives of the PBoC announced the plans outlining their desire to create the country’s own digital currency as soon as possible. At the same time, the Chinese central bank also clearly articulated the advantages of cryptocurrencies over traditional money:

“Digital currencies are much cheaper in circulation than traditional fiat money, promote trade, increase transaction transparency and reduce the risks of money laundering and tax evasion. The use of digital currency will help build a new financial infrastructure, strengthen the payment system in China, increase the efficiency of mutual settlements and accelerate the modernization of the economy.”

Notably, the PBoC has been following the development of the digital currency market for a long time, with an appropriate research group created back in 2014. And since 2015, the Chinese government has been actively studying the regulatory experience of other countries in order to prepare an appropriate regulatory framework.

Evolution of PBoC's relations with cryptocurrencies

It is noteworthy that in a report published on the PBoC’s official website, the word “Bitcoin” is not mentioned even once, although China is one of the top players in the crypto industry. The principles and technologies on the basis of which it is planned to create a state digital currency are also not explained.

At the same time, blockchain technology is mentioned only once as one of the iconic phenomena in the information technology development. However, the general context of the statements suggests that the future digital currency will have much in common with Bitcoin — at least, from a technical point of view.

Wang noted that the PBoC was one of the first central banks to start exploring the possibility of creating its own digital currency, but research experience alone is not enough. Wang said, “We had an early start […] but lots of work is needed to consolidate our lead.” He also confirmed that the central bank has already received approval from Chinese authorities to create its own digital currency, though it is not yet known at which stage its development is currently at. Huang Yiping, a Beijing University professor and the chairman of the research initiative, said that China is ahead of the U.S. in promoting digital finance. He continued:

“It remains unclear if Libra will succeed […] but the concept won’t disappear. But it has sent a warning to China that its lead [in digital finance] is not a sure thing.”

However, in an interview with Cointelegraph, one of the senior PBoC representatives — who wished to remain anonymous — said that the implementation of such a fundamental project may not do without risks, continuing:

“Digital currency is a sphere very important to look at in the future. The turbulence caused by the Chinese-American trade war and the negative implications of it will last for a long time. Under these circumstances, we will have to monitor the development of digital assets since it brings both risks and opportunities. I believe that China will create its digital currency one day.”

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UOB China partners with Ucommune to accelerate growth of startups and SMEs

UOB (China) said it will also tap its group’s extensive network and financial technology partner ecosystem to provide these companies with referrals to …

United Overseas Bank (China) Ltd announced on Thursday that it has signed a memorandum of understanding with Ucommune (Beijing) Venture Investment Co Ltd.

The venture aims to provide financial and workspace solutions for startups and small-and medium-sized enterprises operating across China.

Through the collaboration, UOB Group’s startup and SME customers will be able to enjoy a range of benefits at Ucommune’s 200 co-working spaces across China.

These include preferential rates for office rentals and conference room bookings, member discounts and opportunities to participate in networking and social activities.

Ucommune’s individual and corporate members will have access to the Singapore lender’s comprehensive suite of banking products and services such as foreign exchange solutions, virtual account solutions and wealth management products.

In addition, the two parties will support Chinese startups and SMEs by helping to facilitate their expansion into Southeast Asia.

The two organizations will host knowledge sharing and networking events to connect these domestic enterprises to regional business partners and opportunities.

UOB (China) said it will also tap its group’s extensive network and financial technology partner ecosystem to provide these companies with referrals to other co-working spaces, cross-border investment advisory and financial solutions.

The collaboration with Ucommune is an addition to UOB’s fintech ecosystem, which comprises alternative funding providers and professional service providers to help startups thrive. It also adds to the Group’s many tie-ups with co-working space providers across Asia.

UOB’s other partners include Common Ground (Malaysia), WORQ (Malaysia), Toong (Vietnam) and 80RR Fintech Hub SG (Singapore).

Co-working spaces offer businesses workspace cost benefits, variety, flexibility, networking opportunities and suit the lifestyle preferences of an increasingly millennial workforce.

In first-tier cities such as Shanghai, co-working spaces can help companies save up to 28 percent in rental costs compared with conventional offices. As such, co-working spaces are among the fastest-growing commercial properties in China.

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Bitcoin Association hires Lise Li as China manager to grow Bitcoin SV in the region

BSV is also the only project that adheres to the original design of Bitcoin creator Satoshi Nakamoto. In short, BSV is Bitcoin. Lise Li brings valuable …

Bitcoin Association has named Lise Li as its new China Manager. Lise is the former Chief Operating Officer of Rawpool, a Bitcoin mining pool in China. Based in Beijing, Lise will implement a comprehensive strategy for growth of Bitcoin Satoshi Vision (BSV) throughout China – a key market for the Bitcoin industry. This includes work to highlight the unique capabilities of the Bitcoin SV blockchain to developers, enterprises, miners, venture investors, and Bitcoin users.

Bitcoin Association is the global industry organization for the business of Bitcoin. It supports BSV as the only coin with a blockchain that significantly scales (now), has robust utility (now), and is committed to a set-in-stone protocol for developers to build on. BSV is also the only project that adheres to the original design of Bitcoin creator Satoshi Nakamoto. In short, BSV is Bitcoin.

Lise Li brings valuable China market experience and relationships to Bitcoin Association and BSV’s growth. At Rawpool, Lise’s responsibilities included a digital mining project, management of the mining pool operation, expanding customer accounts, and technical research and cryptocurrency industry analysis. Lise also worked for 8 years in the e-commerce industry. She holds a Bachelor’s Degree in Finance from the University of International Business and Economics in Beijing.

Reacting to her new role, Lise said: “I believe in Bitcoin SV because its scaling ability puts the BSV blockchain technologically far ahead of any other and enables more real use cases. That’s why I see more development teams and businesses across the world are building projects on BSV. I am tremendously honoured for the opportunity to join Bitcoin Association, and will contribute my experience with crypto mining and blockchain technology to help grow BSV’s ecosystem.”

Jimmy Nguyen, Founding President of Bitcoin Association, remarked: “It’s time for Bitcoin Association to expand globally, and Lise is a terrific choice to lead our China program. Lise is an enthusiastic supporter of BSV, has excellent technical knowledge of cryptocurrency mining, and brings wonderful connections throughout China’s Bitcoin and technology sectors. We are thrilled to welcome Lise to the Bitcoin Association family.”

UPCOMING: COINGEEK SEOUL CONFERENCE – October 1-2

Come to Seoul, South Korea to learn about “The Power of BSV Scaling” and Bitcoin SV’s massively-scaled blockchain enables businesses to build more powerful applications. Join the top names in Bitcoin at the CoinGeek Seoul conference October 1-2.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

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New draft rule bans government purchase of Chinese telecom gear

It adopts the definition of “critical technologies” from the 2018 Foreign Investment Risk Review Modernization Act, which includes munitions, nuclear …

Acquisition

New draft rule bans government purchase of Chinese telecom gear

  • By Derek B. Johnson
  • Aug 07, 2019
tech budget

Three departments in charge of federal purchasing policy unveiled an interim rule Aug. 7 amending Federal Acquisition Regulation to ban agencies from purchasing telecommunications and video surveillance equipment from five Chinese firms, including Huawei.

The interim rule from the General Services Administration, the Department of Defense and NASA takes effect Aug. 13 and stems from a provision in the 2019 National Defense Authorization Act prohibiting federal agencies from purchasing telecommunications and video surveillance equipment, along with any “substantial or essential component of any system, or as critical technology as part of any system” from the Chinese tech firms or their affiliates. The regulation language will apply to all new contracts and procurements as well as existing indefinite delivery contracts, as well as options picked up for existing contracts.

While the NDAA does allow for the issuance of individual, one-time waivers to agencies, the rule requires contractors to identify as part of their offer any telecommunications equipment or services that will be provided to the government, including those provided by subcontractors. Acknowledging that such a rule could result in a heavy “information collection burden” on federal agencies, the three departments are updating the System for Award Management to allow contractors to disclose these parts and components on an annual basis.

The draft rule would apply to five Chinese companies (Huawei, ZTE, Hytera Communications Corporation, Hikvision Digital Technology Company and Dahua Technology Company) and cover a range of telecommunications and video surveillance technology. It adopts the definition of “critical technologies” from the 2018 Foreign Investment Risk Review Modernization Act, which includes munitions, nuclear parts, equipment and facilities, items included on the Commerce Control List as well as emerging and foundational technologies that are being developed by an interagency process created through the Export Control Reform Act of 2018.

Technology firms based in China, Russia and other countries have increasingly come under a microscope by the U.S. government over concerns that their parts or components could be compromised or sending data back to servers in their home countries, where local laws may compel them to provide access to foreign intelligence agencies.

Huawei, the most high-profile company targeted, sued the U.S. government earlier this year to overturn the underlying NDAA provision that led in the interim rule released this week.

Last month, lawyers for the government asked a Texas judge to dismiss the case, arguing in court filings that Congress drafted the law “based on years of briefings, hearings, and other information-gathering addressing the cyber-threat posed by the Chinese government, including via Chinese technology companies subject to its influence” and that companies like Huawei and ZTE are “uniquely positioned to be exploited by a foreign government.”

About the Author

Derek B. Johnson is a senior staff writer at FCW, covering governmentwide IT policy, cybersecurity and a range of other federal technology issues.

Prior to joining FCW, Johnson was a freelance technology journalist. His work has appeared in The Washington Post, GoodCall News, Foreign Policy Journal, Washington Technology, Elevation DC, Connection Newspapers and The Maryland Gazette.

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USF professor on artificial intelligence: ‘Data is the new oil’

It’s a race for artificial intelligence, or AI. AI is any kind of technology that can recognize faces, help doctors diagnose diseases, and recognize a gun on …

TAMPA, Fla. (FOX 13) – President Trump says China manipulated its currency to gain an unfair trade advantage. But, while many watch the stock market, another battle with China is brewing. It’s a race for artificial intelligence, or AI.

AI is any kind of technology that can recognize faces, help doctors diagnose diseases, and recognize a gun on surveillance cameras and automatically call the police.

It’s done by computer technology that can sift through data at lightning speed, and everybody wants it.

“I read an interesting phrase a few weeks back that ‘data is the new oil.’ It’s the new good we should have control over,” said Sagar Samtani, an assistant professor and AI researcher at the University of South Florida.

He says China kicked off a major initiative that rivals U.S. companies like Google. Samtani says the future of AI could be far-reaching, “From a warfare point of view, I think it could have a lot of ramifications.”

Continue reading below

Uses on the battlefield can include drones that can identify targets and evade threats. The Pentagon has sunk billions of dollars into AI to help fight future wars and defend the U.S. from enemies who develop, and possibly steal artificial intelligence.

“No American company can compete with a Chinese company that doesn’t have to make a profit,” offered Senator Marco Rubio. “They guaranteed a market share in their own company. China has been waging an economic war against the U.S. for two decades.”

Rubio is suspicious of China, where a government-backed push is underway to develop new artificial intelligence for many potential uses.

Samtani believes the U.S. can be successful in the AI race. “So long as we’re leading in what we need for our priorities, that’s the most important thing,” he added.

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