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US-China CBDC Race and Its Implications on Financial Freedom



Central bank digital currency (CBDC) research and development has been a high priority in China, and the United States appears to be following suit. The Federal Reserve of New York and a group of private banking firms recently launched a 12-week ‘digital dollar’ pilot project. But there are still concerns over how this might affect financial freedom.

On March 9, 2022, U.S. President Joe Biden placed the “highest urgency” on research and development efforts into a potential U.S. central bank digital currency. Was it a move to stay relevant or competitive compared to other regions? 

Many would agree. A handful of nations, including China and Russia, have already started pilot programs. The U.S., U.K., and most of the eurozone are still under the investigation and research stage. This is evident in the CBDC tracker chart below found below: 

World Central Bank Digital Currency Status by CBDC Tracker
Source: CBDC tracker

There’s a noticeable difference in CBDC development by region. Western nations are at risk of falling behind in this regard.  

The U.S. is now taking its first steps at closing this gap.

Proof-of-concept trials

On Nov. 15, various leading investment banks partnered with the U.S. Federal Reserve to begin work on the digital dollar. The NY Fed’s “Innovation Center” will join Citigroup, Mastercard, Wells Fargo, HSBC, and other major financial players to run tests, BeInCrypto reported.

Adding to that, the official post read:

“The Federal Reserve Bank of New York announced that its New York Innovation Center (NYIC) will participate in a proof-of-concept project to explore the feasibility of an interoperable network of central bank wholesale digital money and commercial bank digital money operating on a shared multi-entity distributed ledger.”

U.S. Federal Reserve Building in Washington by Reuters
Source: Reuters

The proof-of-concept will run for 12 weeks and will test different attributes and functions of a digital dollar.

The project is specifically being carried out to test the “technical feasibility, legal viability, and business applicability of distributed ledger technology” on a Regulated Liability Network (RLN).

Key aspects 

The 12-week trial will focus on six key areas:

  • Regulatory framework: The platform will align with the existing regulatory framework and preserve existing requirements for deposit-based payments processing, notably maintaining know your customer and anti-money laundering requirements.
  • Scope: The PoC will simulate digital money issued by regulated institutions in U.S. dollars, although the concept could extend to multi-currency operations and regulated stablecoins.
  • Tokens: The PoC will simulate 100% fungible and redeemable tokens with other forms of money.
  • Industry collaboration: The PoC will include dialogue with the broader U.S. banking community, including community and regional banks.
  • Results: Following the conclusion of the PoC, the banking group will publicize the results, which they hope will be an essential contribution to the literature on digital money.
  • Plans: The banking group participants are not committed to any future phases of work once the PoC has been completed.

The NYIC pilot project news followed another recent research initiative from Nov. 4. Dubbed Project Cedar, the first phase of the CBDC trial tested foreign exchange spot trades.

This was done to determine whether a blockchain solution could improve the “speed, cost, and access to cross-border wholesale payments.”

Joining the race

Regions like Russia and China, among others, have already begun tinkering with how CBDCs would be used in the average person’s day-to-day life. 

China recently surpassed the 100 billion yuan ($13.9 billion) milestone in digital yuan transaction volume on Aug. 31, 2022. This accounts for a 36.3% rise in volume since June.

This showcases the rapidly growing adoption rate of China’s digital yuan (also referred to as the e-CNY.)

Per a People’s Bank of China (PBoC) report, citizens of select cities in China would be granted access to digital yuan wallets. China aims to expand the scope of its current digital yuan trials to the whole of some of its most populous and developed provinces by the year’s end, according to Fan Yifei, deputy governor of the People’s Bank of China.

A sign indicating digital yuan, also referred to as e-CNY, is pictured at a shopping mall in Shanghai
Source: Reuters

While still in the early phases, Russia has also begun laying the groundwork for its digital ruble CBDC support. 

Reducing exposure 

Both China and Russia have motives to act quickly on CBDC implementation in order to reduce their dependence on the United States dollar. Some Chinese state researchers even floated the idea of a pan-Asian digital currency.

The digital token would be pegged to a basket of 13 currencies, including the yuan, Japanese yen, South Korean won, and those of the 10 ASEAN countries. 

The South China Morning Post wrote,

“More than 20 years of deepened economic integration in East Asia has laid a good foundation for regional currency cooperation. The conditions for setting up the Asian yuan have gradually formed.”

This just goes to show why the U.S. and other nations, such as the U.K., are acting with caution and calculation. That said, there are still great concerns and doubts concerning a world economy running on CBDCs.  

Financial freedom, right? 

CBDCs have the potential to make tracking and surveillance that much easier for governments, potentially eroding financial freedom despite what they might claim. It’s no coincidence that the world’s most authoritarian regions are the ones at the head of the pack, rushing to deploy them. 

For instance, the International Monetary Fund (IMF) touted CBDCs as a path to financial inclusion. But there could be some severe implications that came to light after the IMF-World Bank Annual Meeting in October. 

Deputy Managing Director Bo Li highlighted different use cases of how CBDCs were being studied and how they might improve financial inclusion through programmability. 

Although, his comments received severe backlash as they portrayed the opposite of financial inclusion. The take from those comments is that governments want to be able to program money to control what people can and cannot buy.

In a 2021 white paper, the World Economic Forum wrote about what the potential downsides of trying to micromanage society with CBDCs. Some concerns included placing limits on transaction sizes, how much currency one would be allowed to hold, and the nature of goods that a person could purchase. 

Nick Anthony, the Policy Analyst at the Cato Institute’s Center for Monetary and Financial Alternatives, has similar concerns. BeInCrypto contacted him to comment on the latest development on CBDCs.

He stated that: 

“Far too many policymakers—in Congress and agencies alike—are looking at CBDCs as if their job is to be keeping up with the Joneses. And it does seem that the Fed’s pilot is the next step in that. But the fact that countries like China and Nigeria are leading the way on CBDCs should be their signal to go the opposite direction.”

CBDC implications 

In an overview and the latest development, the United States Federal Reserve Board released a paper to discuss ‘Macroeconomic Implications of CBDC’ on Nov. 17. It analyzed the potential positives and negatives and emphasized the role of a CBDC in regard to monetary policy and remuneration. 

Per this paper, a digital dollar could improve welfare by ‘reducing financial frictions in deposit markets, boosting financial inclusion, and improving the transmission of monetary policy.’ However, there are some restrictions to it as well: 

“A CBDC entails significant risks, including the possibility of bank disintermediation and associated contraction in bank credit, as well as potential adverse effects on financial stability. 

A CBDC also raise important questions regarding monetary policy implementation and the footprint of central banks in the financial system. Ultimately, the effects of a CBDC depend critically on its design features, particularly remuneration.” 

Nonetheless, it doesn’t come as a total surprise why politicians and banks support CBDCs. This is because they would allow for a peer-government/bank-peer exchange. You might remember that Prime Minister Justin Trudeau ordered banks to freeze accounts of his political critics in Canada.

In any form, the relationship between a government and its CBDC will raise challenging questions regarding what financial freedom really means. 


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets




The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Digital Wallet Growth Will Enable More Closed-Loop Transactions




Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.

Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Strike Launches Lightning Remittances in the Philippines




Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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