China is Accepting a Digital Currency to Pay Taxes. What Does This Mean for Crypto?

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Will the Chinese digital yuan overtake the U.S. dollar?


Key points

  • Government acceptance of digital yuan could spark interest for other countries to launch their own digital currencies.
  • With all of the trade coming in and out of China, their dedicated digital yuan could become one of the biggest currencies in the world.
  • Many have predicted that the digital yuan will slowly begin to supplant the U.S. dollar, especially when purchasing goods or services originating in China.

China’s new digital yuan, e-CNY, is now being used for official payments like taxes and social security premiums. After testing the initiative at the Winter Olympics this year, the coin is being adopted by an increasing number of Chinese citizens. With China being such a prominent trading country, e-CNY could find itself replacing the U.S. dollar as the most prevalent currency for use in international trade. 

Digital Yuan

China has taken a bold step, being among the first to create their own form of digital currency in the form of the digital yuan. After a test at the Beijing Winter Olympics a few months ago, e-CNY saw reduced success, as few spectators were able to attend the event. However, the currency’s adoption has grown since then, with a reported 10% of Chinese citizens already having used it in some way. With this rate of growth for the currency, some have speculated that it has the potential to dethrone the U.S. dollar as the most prominent global reserve currency.

Worldwide Effects

The e-CNY token has the potential to shake up the financial world. China is the world’s most active trading country, and many have predicted that the digital yuan will slowly begin to supplant the U.S….

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