PBoC official says 'completely anonymous CBDC is not an option'

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An official of the People's Bank of China (PBoC) has said a "completely anonymous central bank digital currency (CBDC) is not an option" based on international consensus.

Mu Changchun, the head of the Chinese central bank's Digital Currency Research Institute, said in a forum on Saturday that the so-called "controllable anonymity" is at the core of China's digital yuan design. 

It's also the first time that the PBoC openly confirmed and elaborated at length the use of digital yuan not only as a payment method but also a high-level financial surveillance tool.

"The precondition of CBDC's anonymity is it being risk-controllable and limited. A fully anonymous CBDC is not practical," Mu said. He added that the controllable anonymity is also based on international consensus. Any design that doesn't satisfy anti-money laundering, anti-terrorism financing and anti-tax evasion purposes will be simply vetoed, he said. 

According to Mu, the digital yuan's controllable anonymity feature means privacy only applies to end users when they transact among themselves while the details of those transactions remain visible to the central bank and regulators.

His remarks confirmed The Block's report last year that the authorized patents filed by the PBoC suggested the technological intention of the digital yuan being a financial tracking tool.

Mu said there will be severe consequences if the design of China's digital yuan over-emphasizes on users' privacy and ignores its capability in financial surveillance on criminal activities. Mu cited the wide use of Tether's USDT and bitcoin by criminals in laundering proceeds gathered from illegal economic activities such as drug dealing and online gambling.

It was reported last week that China's extensive crack-down on internet crimes has sentenced nearly 100 people to serve behind bars since November for laundering proceeds using USDT via crypto over-the-counter desks worth more than $30 million. 

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