The concept of digital currencies continues to perpetuate. News that China’s central bank will launch a state-backed cryptocurrency and initially seven institutions will have access to this digital currency. The Industrial and Commercial Bank of China, which is considered the second largest bank in the world, the Bank of China, the Agricultural Bank of China, along with, Alibaba and Tencent, Union Pay, an association of Chinese banks, will receive the cryptocurrency. Separately, the Intercontinental Exchange announced that it will begin to make payouts to customers in the form of digital currencies as opposed to fiat currencies such as the dollar.
What Technology is Going to be Used?
While the development of the new Chinese cryptocurrency is secret, there are leaks that point to a digital currency that uses blockchain. Rumors say that the cryptocurrency has been ready since last year and that the cryptocurrency could launch as soon as November 11, China’s busiest shopping day, known as Singles Day.
Distribution of the PBOC Digital Currency
The seven institutions that receive the central bank cryptocurrency will act as a distribution network. At the time of launch, the recipient institutions will disperse the cryptocurrency to 1.3 billion Chinese citizens and others doing business in the renminbi, which is China’s fiat currency. The expectations is that the central banks cryptocurrency will be distributed around the global and eventually land in countries like the United States through relationships with correspondent banks in the West.
The distribution plan which uses some of the most respected Chinese companies and banks is slightly different than a distribution that is occurring via individual firms. For example, Facebook’s planned libra cryptocurrency will be backed by a basket of currencies issued by central banks. The Bank of England governor Mark Carney floated the idea of a new currency backed by several central banks to replace the US dollar as the global reserve currency.
Intercontinental Will Payout in Cryptocurrency
A recent announcement by one of the world’s largest financial exchange institutions will make digital currencies a payout mechanism. International Exchange, which is the company that owns the New York Stock Exchange, will offer futures contracts paid out in cryptocurrencies toward the end of September. This is for customers who engage in crypto trading. The company made the announcement that it had won the charter from the New York State Financial Services Department to hold investors’ digital coins. The company’s Bakkt business will offer the contracts and hold the cryptocurrency. The futures contracts were already certified by the US Commodity Futures Trading Commission. The announcement further enhances idea that people could use cryptocurrencies for items beyond an investment vehicle.
Bakkt, the company that won the chart, and the newly approved Bakkt Trust Company is qualified to hold custody of traders’ bitcoin tokens. Founded in August 2018, the company has partnerships with Starbucks and Microsoft. The Intercontinental Exchange has always had a long-term goal is to utilize cryptocurrencies for daily payments.