China, in an effort to drive adoption of its digital currency e-CNY, is preparing for a massive token airdrop in Shenzhen. Despite China’s reluctance to sponsor the crypto industry, it is betting heavily on its central bank digital currency (CBDC), which will act like a crypto and facilitate instant payments, but will be issued and regulated by the central bank. A total of $4.5 million (about Rs 34 crore), wrapped in e-CNY, will be landed in Shenzhen, China.
After banning all crypto-related activities in September last year, China launched the beta version of the digital yuan, or Chinese electronic yuan, in January of this year. In the past five months, the world’s second largest economy has taken measures to get more citizens to use its digital central bank currencies.
The Shenzhen Municipal Bureau of Commerce will partner with several banks to distribute the digital currency in the form of “red envelopes” through a “lottery operation” to its residents.
With the approach of the Dragon Boat Festival, the traditional high season for consumption, Shenzhen residents welcome an exquisite gift package for consumption. As part of Shenzhen’s “Combo Boxing” consumption promotion policy, Shenzhen will distribute 30 million yuan of RMB red digital envelopes through the Meituan platform to promote people’s living consumption “.
Shenzen residents will be able to use their e-CNY tokens to purchase food, clothing, housing, and transportation.
This development comes a month after China’s central bank added ten cities to launch an experimental central digital currency in China.
“Many consumers hoped to use [e-CNY] Red envelopes are in more online and offline consumption scenarios,” the press release noted.
In fact, only recently, a satellite city of Beijing called XiongAn New Area launched a similar campaign to provide 50 million digital yuan as gifts to residents.
A Reuters report said China should increase the amount it ‘gives’ to people via e-CNY tokens, citing economists.
Besides making e-CNY an alternative to daily payment in China, President Xi Zinping’s government is also aiming to position e-CNY as a payment option for international transactions.
Meanwhile, China is clamping down on illegal crypto activities taking place in its region despite strict ban orders.
In February of this year, the country imposed a new ban on raising funds using “virtual currency”, deeming this activity illegal.
Chinese authorities are also combing regional geography to identify illegal mining centers. Chinese officials tracked down areas with regular electricity shortages, and conducted raids.
In March, a cryptocurrency mining center was seized in the Chinese province of Guangdong. The facility consumed more than 90,000 kilowatts of electricity after running for more than 1,000 hours.
Not just cryptocurrencies, China also closely monitors the movement of non-fungible tokens (NFTs) in order to protect people from the financial risks associated with digital assets.
Three organizations met in China to focus on non-financial task forces. These organizations are, the China Banking Association, the China Internet Finance Association, and the China Securities Association. The group aims to shape the NFT sector in a way that reduces the chances of them being used as tools to tackle illegal activities such as money laundering.