China’s Xi Urges G20 to Discuss Central Bank Digital Currencies (CBDCs)
Chinese President Xi Jinping urged his fellow world leaders to discuss CBDCs. His speech of 21 November is quite remarkable as his country has a lead in launching its own digital currency and the Chinese authorities are currently cracking down on crypto miners within its borders.
During a videoconference led by the Saudi authorities, the G20 discussed the Covid-19 pandemic and its outlook on the world economy mostly, but other topics such as climate change and sustainability.
Chinese President Xi Jinping surprised many when he discussed the need for a global discussion on crypto, saying that the G20:
Needs to discuss developing the standards and principles for central bank digital currencies with an open and accommodating attitude, and properly handle all types of risks and challenges while pushing collectively for the development of the international monetary system.
Crackdown versus hash rate
As noted by Cryptotips last week, Chinese miners are faced with a crackdown by the government which is coming down hard on money laundering through digital currencies. Problem for the Chinese miners is twofold. Given that they control some 70% of bitcoin’s hashrate or mining power, they must offer the mined Bitcoin to the market to continue paying for their operations. But, as the Chinese authorities freeze bank accounts of any company they are investigating, many are unable to continue operations. Furthermore, electricity prices have been on the rise.
In a speech that addressed the future of global economy in the wake of the COVID-19 pandemic, Xi Jinping said the G20 “needs to discuss developing standards and principles for central bank digital currencies #CBDCs with an open and accommodating attitude.” https://t.co/NL7XD3bpTz— Guardian™ ¯_(ツ)_/¯ (@withego) November 21, 2020
It is widely assumed that President Xi wants to clean up the crypto market in his country before a nationwide rollout of his own digital yuan. If one takes into account the significance of the Chinese President mentioning digital currencies at the G20, we should assume that this roll out will happen quite soon. But what will it mean for the price of Bitcoin and for the future of crypto mining operation on Chinese soil?
And, more importantly, will the introduction of CBDCs come with a demand for regulation of major crypto currencies like Ethereum, Ripple and Tether? Last week financial commentators widely assumed that Bitcoin was already too well known and too rolled out to still be regulated, but that the other major coins could face a demand for regulation.