In an interesting twist–and perhaps another chess move by the Chinese central bank– is the revelation that the digital yuan may not only be stored using a “hot” wallet but a traceable hardware wallet activated by users submitting personal details.
CCB Digital Yuan Feature
This detail may have spilled out accidentally. Over the weekend, the China Construction Bank (CCB)—which is one of the largest state-owned banks in the expansive Asian economy, for the first time allowed users to test out the digital yuan within its mobile app.
Given the expectations around the central bank digital currency, the feature trended a couple of hours before the bank, unexpectedly pulled off the feature citing “too much attention.”
For those who could register and try out the digital yuan using their phone number, it was discovered that the digital yuan would likely be used primarily for the settling of small payments.
As such, users can make payments, deposit or withdraw since the digital yuan is legal tender complementing hard cash. Besides, there are several types of multi-tiered wallets with varying daily limits for users.
Digital Yuan Hardware Wallet Will Not Be Anonymous
Now, CoinDesk has verified that there may be work in progress by the PBoC to enable hardware wallet support for the digital yuan. The discovery is because the news outlet managed to keep a copy of the terms and conditions that users had to agree on before using the service.
Under “Definitions”, the CCB stated that besides the hot wallet offered by the bank’s mobile app, a separate hardware wallet may also “also be in the works.”
Further details hint that the hardware wallet would either be a physical medium connecting the user’s digital yuan account requiring prior approvals at bank counters before being accessed. Alternatively, the wallet can be an ordinary digital medium (more like a physical wallet) for storing the CBDC.
As previously reported by the state-backed news agency, Xinhua, the closed pilot was only carried out in major cities including Shenzhen, Suzhou, Xiong’an New District, and Chengdu.
This trial allowed participants to test a mobile app for storing and exchanging the DC/EP to improve the application’s functionality as part of the country prepares to host the 2022 Winter Olympics in Beijing.
Today’s announcement widens the test area. More cities in Northern, Eastern, and Mid-China are open to pilot the digital yuan depending on if permitting conditions are met. They will receive support from the four initial cities which first piloted the coin.
As the issuer, the PBoC will create policy as safeguards but there was no indication of the exact timeline of when this pilot will begin. However, the policy design of the DC/EP will end by the close of the year.
As previously reported, the PBoC is currently testing the digital yuan in several cities. While the central bank can choose any emerging technology to power the CBDC, the mention of a hardware wallet stripping out the anonymity of traditional cryptocurrencies and cash points to the advanced implementation of a DLT solution.