- The United States and China, two of the world’s largest economies, have been at loggerheads.
- China’s CBDC, the digital yuan, is scheduled to be launched at the 2022 Winter Olympics in Beijing.
- With the rise in CBDCs, Brad Garlinghouse, the CEO of Ripple, had advised Central Banks, including the United States, to get involved with cryptos.
- China is ahead of the United States in launching a CBDC. Could we see a response in the form of Ripple’s XRP?
As the crypto industry evolves and matures, new trends and innovations are introduced. One such is the Central Bank Digital Currency (CBDC). Unlike traditional cryptos, these assets of central banks will be backed by the nation’s cash reserves. Thus, making them more stable.
China has already scheduled the digital yuan to be launched at the 2022 Winter Olympics in Beijing. The United States, on the other hand, hasn’t made much progress in the development of digital dollars. As a result, there have been different speculations about which asset could emerge as the CBDC, including Ripple’s XRP.
China’s Journey to The Digital Yuan
Although just receiving media attention in recent times, the development of the digital yuan began as early as 2014. In February, WeBank and Fintech Giants MYBank were selected by China to experiment and test the digital yuan.
The project is already in its later stages and is set to launch later in 2022. Upon launch, the digital currency will be controlled by the People Bank of China (PBOC).
Although China is ahead of the pack (but not winning – PwC) in launching its CBDC, the country has announced no plans to replace the dollar with the digital yan. The digital equivalent is a way to replace coins and cash in circulation and primarily focuses on domestic use.
Can Ripple’s XRP Become the Digital Dollar
What is the relationship between the XRP and the digital dollar? In 2020 Brad Garlinghouse, the CEO of Ripple, noted that XRP might prove to be the ideal solution for central banks. He opined that XRP would act as a bridge asset for central banks.
He is quoted saying:
The point [of Ripple’s efforts] is to enable a lot of efficiency and liquidity between XRP and the U.S. dollar.
Despite the ongoing legal battle with the Securities and Exchange Commission (SEC), Brad Garlinghouse has also asserted that now is a crucial moment for the U.S. to establish itself as a leader in the booming crypto business.
In March, Ripple piloted a private ledger for Central Banks seeking to launch CBDCs. The CBDC Private Ledger is based on the same blockchain technology that powers the XRP Ledger (XRPL), which means that the CBDC Private Ledger is built for payments.
On the Flipside
- This piece is in no way endorsing the cryptocurrency XRP but shows a possibility based on trends
- The loggerheads between the United States and China could mean that the U.S. will ship out a CBDC soon
The United States Vs. China
The United States and China represent two of the biggest countries in terms of crypto regulation and two differing views of the industry. As the quest for dominance continues, we may see these countries continue to be pitted against each other.
The strained relationship between these two superpower nations has dragged on, affecting the blockchain industry. One area of growing interest in the crypto space has been the Central Bank Digital Currency (CBDC).
As China moves closer to achieving the digital yuan, we are bound to see a response from the United States. The U.S. Central bank has already listed preconditions for a digital dollar. Could the entire development process of a CBDC be skipped for established cryptos like XRP or in favor of another CBDC like the Sand Dollar digital currency? What do you think will be the turn of events?
Ripple moves into China with AmEx and LianLian Group entry: Providing reach to XRP-powered xRapid through multi-hop
American Express has recently announced that they will be commencing their entry into the Chinese market, which has been predicted as being the biggest card payments market by late next year. This move was made as a joint venture with LianLian Group and is the first venture to not process payments through the state-controlled UnionPay network.
The approval reportedly allows the company to process and settle payments in CNY domestically by setting up their own network in conjunction with their partner. The venture is named Express [Hangzhou] Technology Services Co., and is required by the Chinese government to complete preparations for operations within a year.
Notably, both American Express and LianLian Group have been in a partnership with Ripple, and are confirmed to be members of RippleNet. AmEx joined RippleNet with a vision to aid Small and Medium Enterprises with moving money late last year. LianLianPay on the other hand, joined the network in February this year and has over 150 million registered customers
While this not only marks the entry of Ripple into one of their highest priority markets for cross-border payments, it is also important to note that the company is planning to move into the Chinese market, as seen by postings on their official job portal. The job postings have since been removed, but are still present on job portal Glassdoor.
China has a strict policy against cryptocurrencies, thus ruling out the adoption of XRP-powered xRapid in the country anytime soon. However, the government seems all for the use of blockchain and DLT, which is what Ripple utilizes in its xCurrent and xVia products. However, the kicker for XRP HODLers is contained within the implications of this joint venture, which provides the much-needed fiat liquidity in the Chinese market.