Inadequate Regulatory Framework for Digital Yuan Raises Concerns
China’s push for the adoption of the digital yuan has inadvertently led to an increase in illicit activities and scams. Recent cases of fraud and money laundering involving the digital currency have highlighted the need to revisit and strengthen regulatory measures.
Digital Yuan ‘Run-Score’ Scam Exposed
In a groundbreaking case, criminals exploited the exchange function of the digital yuan to quickly empty an ATM in Shanghai. The fraudster, Wang, used multiple mobile phone numbers to register digital currency accounts and executed a series of transactions within two hours, draining 123,000 yuan from the ATM.
Money Laundering and Fraud Linked to Digital Yuan
Various regions have reported instances of money laundering and fraudulent activities related to the digital yuan. Criminals are taking advantage of public enthusiasm for digital yuan trials to steal personal information and funds. In one case, a man in Kunming used digital yuan to buy gift cards as part of a remote fraudster money laundering scheme.
Strengthening Anti-Money Laundering Regulations
Experts argue that current anti-money laundering regulations for digital yuan transactions are inadequate. Recommendations include defining obligations and responsibilities for operating institutions, enhancing monitoring capabilities for suspicious transactions, and adopting technologies like smart contracts for improved security and auditing.
Digital Yuan Adoption Challenges
The digital yuan has shown potential for global adoption but still faces challenges. Former PBOC governor Yi Gang revealed that by June 2023, there were 950 million total transactions with a cumulative value of 1.8 trillion yuan. However, some experts believe that adoption rates are not as strong as they seem and that there is room for growth.
Hot Take: The Future of the Digital Yuan
The digital yuan aims to counter Western sanctions, expand overseas adoption, and challenge the dominance of the US dollar. While it has faced obstacles and concerns regarding illicit activities, its potential for growth and development remains promising.
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