From the Chinese government’s perspective, cryptocurrencies are not considered legal tender; instead, they are categorized under a type of “virtual commodity,” but some industry players believe the Blockchain Service Network (BSN) infrastructure can stimulate the development of virtual currencies like a CBDC.
During an interview with Cointelegraph, Eden Dhaliwal, Global Managing Director at Conflux Network, a layer-1 blockchain protocol and the only state-endorsed public blockchain project in China, stated that the government of China is highly motivated to launch a CBDC to “dominate the digital commerce landscape and make the economy future-ready.”
The BSN is a major blockchain interoperability infrastructure network. In July, they announced a decision to separate the governance of the BSN into two ecosystems: BSN China and BSN International.
Dhaliwal gave his thoughts on why BSN split in this way and its implications on the Chinese blockchain ecosystem:
“BSN most likely split in order to make the network regulatory compliant, more secure and economically stable, without losing the functionalities of public blockchain networks. (…) This two-tiered ecosystem ensures capital and asset flow across chains and countries without compromising on the trustworthiness of the network.”
On the purpose of integrating public chains on BSN, Dhaliwal states that to reach the scale and adoption for retail users and ensure a massive ecosystem growth, BSN “needs to integrate a wide variety of public chains to create interoperability, innovation, and internationalization of digital assets and instruments”:
“As one of BSN’s key mandates is to advance the blockchain ecosystem in China, implementing private chain solutions enables a focus on limited enterprise and government use cases.”
He told Cointelegraph that by bringing public chains into the mix, “opportunities are created for innovative financial instruments and digital ventures that would integrate seamlessly with the CBDC.”
In August, China’s Commerce Ministry announced that it will expand the trials of the nation’s central bank digital currency to include Beijing and Tianjin and Hebei provinces. According to an Aug. 14 report by the Wall Street Journal, there is not yet a set time when the expanded pilot program of the Chinese CBDC will begin.