The People’s Bank of China intends to enable anonymous digital yuan transactions of small amounts in order to protect “reasonable” anonymity needs.
Chinese officials want to ensure maximum privacy for the user in the country's central bank digital currency, or CBDC, according to a source associated with the People’s Bank of China.
Mu Changchun, head at the digital currency research institute of People’s Bank of China, spoke about China’s digital yuan privacy capabilities at the 2021 China Development Forum on Sunday, a local news agency Sina Finance reported.
Mu stated, a completely anonymous CBDC “is not feasible” because a national digital currency should meet the requirements related to Anti-Money Laundering, Counter-Terrorist Financing and anti-tax evasion. However, it doesn’t mean that digital yuan lacks user privacy, he assured.
This so-called “controllable anonymity” approach is a key feature of China’s digital yuan, explaining that the government is offering specific tools to ensure maximum user privacy and financial security in conjunction with AML measures, Mu said. He stressed on telecom operators, that are involved in the research and development of the digital yuan, are not allowed to reveal data and information of users to third parties, even including the central bank.
Third parties such as e-commerce platforms are too not able to access the personal data of digital yuan users, as customer payment information is encrypted in the form of a sub-wallet, Mu explained. Moreover, the digital yuan features a number of technical potentials to ensure privacy, including ID anonymization technology and a personal data protection system with internal control management mechanism in accordance with relevant Chinese laws, the executive noted.
To protect “reasonable” anonymity needs, the PBoC is also in plan to adopt a CBDC design that enables anonymous digital yuan transactions in small amounts, Mu reportedly claimed. “The digital renminbi adopts a design of small amounts anonymous, keeping large amounts traceable,” he said.
“In short, the protection of user privacy by digital renminbi is the highest among the current payment tools,” Mu concluded.
From a previous report by Cointelegraph, several global jurisdictions like the US have considered user privacy issues as one of the biggest problems of a CBDC. According to the European Central Bank’s digital euro public consultation, user privacy is the top requested feature for a European CBDC, followed by security and pan-European reach.