China has launched a pilot application of a wallet designed to allow users to spend the central bank’s digital currency, which is under development.
The “e-CNY (pilot version)” app was released in China on Tuesday for download on iOS and Android stores. The People’s Bank of China has been working on a central bank digital currency for years and envisions its citizenry eventually using the technology to pay for goods and services without physical coins and bills.
The digital yuan, also known as the digital renminbi, differs from cryptocurrencies like Bitcoin in that it is not decentralized but just a digital version of its current currency, which is controlled by China’s central bank. Some users had already been able to download the app through private invitations.
While the app was broadly rolled out in China on Tuesday, the wallet included a notice telling users that the digital yuan is still in the research and development pilot stage and is only usable through supported institutions like major banks for the time being, according to Reuters.
Additionally, the pilot version of the app is only available for registration in certain Chinese cities, such as Beijing, Shenzhen, Chengdu, and Shanghai, where testing for the digital currency’s usage is ongoing. To incentivize use of the digital yuan, the Chinese government has gifted free digital cash via lotteries.
While China has championed the use of its central bank digital currency, it has pushed back aggressively against the possession, trade, and mining of cryptocurrencies like Bitcoin, which have exploded in popularity over the last couple of years.
Last May, China called for the end of cryptocurrency mining operations in the mainland, which is the process by which new Bitcoins are minted. China’s central bank additionally asked banks and payment institutions to crack down harder on cryptocurrency trading.
Then, in September, the country declared all cryptocurrency transactions illegal. Beijing said that online services offering cryptocurrency trading, including overseas cryptocurrency exchanges, are banned. The government also reiterated its pledge to eradicate Bitcoin mining across the country.
According to a notice on the digital yuan app on Tuesday, “Beijing Winter Olympics areas” are among the places the virtual currency can be used. The 2022 winter Olympics are set to begin in Beijing in February.