China's Shenzen Zone Opens Doors to Digital Currency Research

John Moore
  • New policy on development of Shenzen Economic Zone welcomes research in "Digital currency and payments" 
  • China has been working on its own digital currency for five years, while more recently banning trading and listing of cryptocurrencies
  • Long-term plan for Shenzen continues its role as a bridge between Hong Kong and Chinese mainland, hopes it will serve as an example of Chinese economic reform and innovation

In a move that perfectly encapsulates the Chinese authorities’ somewhat conflicted relationship with digital assets, it’s been revealed that the Shenzhen Special Economic Zone will look to open its doors to crypto companies and aid their research. 

The ‘One Country, Two Systems’ concept that will drive the zone’s mission to serve as an example of progressive Chinese economic reform - which Google Translate somewhat artfully Anglicises as “socialism with Chinese characteristics” - seems to extend well beyond the project and into the State’s handling of crypto in general.

To wit, the country forbids any and all trading of Bitcoin or similar digital assets by its citizens, whilst simultaneously seeking to develop and launch its own. The central bank issued digital currency, colloquially known as the ‘Digital Yuan’, has apparently been in development under the auspices of the People’s Bank of China for some five years project, but could well be a wolf in crypto’s clothing

The Shenzen zone has been featured in the news recently due to its proximity to the ongoing social unrest in Hong Kong, and has long acted as a buffer between the Chinese mainland and the more liberal principality.

Now that role is apparently being codified in a way that allows political and economic reforms there to serve as an example of the State’s vision for modern China, and bridging the gap between socialist ideology and the Western business practicies. The South China Morning Post also posits that the new policy could serve to reduce Hong Kong's influence and stature in the region.

Nevertheless, part of the plan will allow for Shenzen to “vigorously develop strategic emerging industries”, including support for “innovative applications such as digital currency research and mobile payment”, as a way of promoting interoperability with Hong Kong and Macao’s financial markets. In the light of the State’s broader policies, which seek to promote the incumbent financial system by outlawing options such as Bitcoin, it is unclear exactly what form this research will be allowed to take. 

Bitcoin has regularly been cast as a safe haven for those looking to secure their assets during the recent problems in Hong Kong, with a noted premium being seen in the BTC price on sites like Local Bitcoins

Former Federal Reserve Nominee Announces Launch of New Stablecoin

  • Former Trump Fed nominee Stephen Moore has announced his collaboration to launch a stablecoin.
  • 'Frax' will be backed by a fractional reserve and generate interest through loans. 

Stephen Moore, a former nominee by President Donald Trump to join the Federal Reserve, has announced his intention to launch a new stablecoin

Moore, who was picked by U.S. President Donald Trump earlier in the year as a candidate for the Fed, says he is partnering with Ralph Benko and Everipedia co-founder Sam Kazemian, and will serve as chief economic officer for the project. 

The stablecoin, titled Frax, will be backed by a fractional reserve as opposed to being pegged tothe value of the U.S. dollar or another fiat currency. Frax will be able to generate interest by leveraging the reserve via loans, which should keep the price of the coin stable. 

Moore commented on the disruption Frax and stablecoins pose to the traditional financial markets, 

Central banks will soon feel the competition from private currencies such as Frax. The days of government monopoly of currencies by central bankers is coming to a screeching halt.

He continued, 

Currencies are intended to retain their value over time, but given the wild gyration in values of currencies and the struggle in many countries with hyperinflation, we need a global currency that has a stable value to benefit consumers, businesses and investors.

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