DCEP: China’s National Digital Currency Overview


What is DCEP

Digital Currency DCEP (Digital Currency Electronic Payment, DC/EP) is a national digital currency of the China built with Blockchain and Cryptographic technology. The currency is pegged 1:1 to the Chinese National Currency – the RenMinBi (RMB). The overall objective of the currency is to increase the circulation of the RMB and international reach – with eventual hopes that the RMB will the a global currency like the US Dollar. China has recently established an initiative to push forward Blockchain adoption, with the goal of beating competitors like Facebook Libra – a currency which Facebook CEO Mark Zuckerberg claims will become the next big FinTech innovation. China has made explicit that Facebook Libra poses a threat to the sovereignty of China, insisting that digital currencies should only be issued by governments and central banks. DCEP is not listed on cryptocurrency exchanges and will not be for speculation of value.

Update: On Jan 10, China’s Central Bank issued a press release stating that top-level design of DCEP has been completed. Joint bank testing of DCEP will start soon.

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DCEP is the only legal digital currency in China

DCEP is a currency created and sanctioned by the Chinese Government. It is not a 3rd party stable coin such as Tether’s cryptocurrency token “CNHT” which is also pegged to the RMB in a 1:1 ratio. DCEP is the only legal digital currency in China (cryptocurrencies such as Bitcoin are not legal tender in China).

Huang Qifan (Chairman of the China International Economic Exchange Center) said they have been working on DCEP for five to six years now and is fully confident it can be introduced as the country’s financial system. It’s currently being rolled out, with the People’s Bank of China (c) issuing the currency.

DCEP can achieve real-time collection of data related to money creation, bookkeeping, etc, providing useful reference for the provision of money and the implementation of monetary policies

Huang QiFan at the China Finance 40 Forum
DCEP will have two layers of cryptographic security

DCEP is not for speculation

China has made it explicitly clear that their National Digital Currency is not for speculation. Mu Changchun, the head of the People’s Bank of China digital currency institute made it is “a digital form of the yuan” and there would be no speculation to its value. This is to the disappointment of the online community in China, where some netizens commented “So there will be no fun in it” on Sina.com

The currency is not for speculation. It is different to bitcoin or stable tokens

Mu Changchun, PBoC’s digital currency research institute

Deployment and Distribution

DCEP will initially be distributed to all commercial banks affiliated with the Chinese Central Bank such as ICBC and Agriculture Bank of China. The rollout of DCEP will be similar to that of physical yuan. The significance of DCEP is that it’s designed as a replacement of the Reserve Money (M0) system, cutting back the cost and friction of bank transfers. Huang pointed to outdated systems like SWIFT is both slow, inefficient and costly for inter-bank payment transactions. This initial deployment will serve as an official production test for the currency system, where the network and security will be validated. In the second phase, DCEP will be distributed to large fintech companies such as Tencent and Alibaba to be used in WeChat Pay and AliPay respectively.

DCEP is a centralized, sovereign issued currency. It is not possible to mine DCEP or stake on the DCEP network.

Shenzhen will be first city to test DCEP

According to Chinese new site CaiJing – DCEP will be rolled out in Shenzhen as a test city first. Currently the planned date is before the end of 2019. This shows that China is serious about deploying DCEP and also “winning” the digital currency race.

Merchants must accept DCEP

The central government has mandated that all merchants who accepted digital payments (such as Apple Pay, AliPay and WeChat) pay must accept DCEP. This will give DCEP a large nation wide acceptance in China, with every merchant obligated to participate or face a potential loss of their business license. This will make DCEP the most accepted digital currency in the world.

Huawei Pay to Support DCEP

Owing to the widespread use of Huawei phones in China and the company’s close ties with the Chinese Government, Huawei is rumoured to be the first adoptee of DCEP. New leaked images of the Huawei Pay app shows direct connections to Chinese merchant banks and ability to withdraw DCEP. On on Huawei’s heels, rival company Tencent has also stated they will support DCEP on the WeChat pay platform.

Is DCEP backed by Gold

The simple answer is “No”. On a recent episode of Kitco News, journalist Max Kaiser claimed that China will launch a gold backed cryptocurrency, with the intention of destroying the USD as a reserve currency. He added that China has already amassed as much as 20,000 tons of gold. However this is mere speculation – China has no plans to return to the Gold Standard nor issue gold backed cryptocurrencies.

NFC Contact based payment

According to Official Sina Blockchain, DCEP will have NFC based payment options that don’t require devices to be online during the transfer. This will be poised as a direct replacement of paper money, as DCEP will be usable in areas without internet coverage. In addition, DCEP doesn’t require the mobile device to be bound to a bank account – meaning the unbanked population will also have access to the digital currency.

Mandate to adopt Blockchain

China has established a country wide initiative to push forward Blockchain Adoption. President Xi JinPing has mandated that the ‘country’s development of blockchain technology should be sped up ‘ on Oct 24th in front of the Political Bureau. This speech has also been echoed by Li Wei, head of the People’s Bank of China. China has adopted the “Blockchain, not Cryptocurrency”, whereby the benefits of Blockchain is highlighted. On the other hand, cryptocurrencies that are native to Blockchain are suppressed as Cryptocurrency Exchanges and ICOs are banned in the country.

China is expected to spend $1.42 Billion USD on blockchain development by 2020

Statista Research Report

DCEP is a Centralized Currency

DCEP is a digital currency that is run on a centralized private network – the Central Bank of China has complete access and control of the currency. This is a huge contrast to Bitcoin, which has an open decentralized network where there is no centralized leader. In the case with DCEP, the Central bank of China has the ability to create or destroy DCEP.

Trading DCEP, What platforms support DCEP

Mere hours after DCEP has been announced, various (potentially scam) Chinese exchanges have listed IOUs or knock-offs clones of DCEP. It’s important to know that DCEP is currently only distributed to banks working with the PBoC and will not be available for the public. If you want to find out what are reputable exchanges, check out our top cryptocurrency exchanges guide. It is strongly recommended NOT to trade DCEP until it is officially released as there is no guarantee exchanges have access to the digital currency.

Knock-off clones of DCEP are already trading in (potentially) scam exchanges.

How to buy DCEP?

Currently DCEP is only available to other banks working with the People’s Bank of China. This will eventually open up to the general public in 2020. There are currently no cryptocurrency exchanges that trade DCEP.

Is DCEP a challenge to the US monetary system?

The overwhelming view appears to be yes, both from the Chinese and the US perspective. According to statistics from the World Bank, 1.7 billion adults around the world use cash because they don’t have bank accounts. However, two-thirds of this population own a mobile phone, which can be used to make monetary transactions. This is what’s been happening in China, where mobile payments such as Alipay or WeChat Pay have more than 1.7 billion customers across China. Currently, the two online payment companies handle more payments monthly than Paypal did in the whole of 2017 (i.e. USD $451 billion). It’s very common in China to see street vendors accepting Alipay or WeChat pay.

Alipay and WeChat being accepted at an ATV rental shop

With the mobile wallet payment infrastructure in place, their cooperation with the PBoC could be the answer to distributing DCEP overseas. This would fit China’s “Belt and Road Initiative”, the aim of which is to build a new trade route connecting Asia with Europe and Africa. The idea is that with DCEP being used by mobile wallets, populations along the Belt and Road can be connected, bypassing existing financial infrastructures completely and giving an opportunity for the unbanked to pay for online purchases and build their savings.

In the US, the government does not see a demand for a digital currency. In a letter from the Chairman of the Federal Reserve, Jerome Powell, he took the view that many of the challenges a digital currency intends to solve does not apply to the US. In his view, the US payments landscape is already highly competitive and innovative, with plenty of digital payments options for consumers. Powell also commented, echoing the sentiments of those US lawmakers opposing Libra, that a digital payment where you would know and be able to track each and every payment would be unattractive for the US.

Whilst the House Committee on Financial Services also sees Libra has potentially raising national security concerns, observers consider that the challenge from China is not being taken seriously. Because on the other hand, China is worried that Libra will reinforce the dominance of the US Dollar and is therefore working on fast-tracking the launch of DCEP. And it is likely that China will outrun the threat from Libra.

DCEP as a weapon in an economic war with the US?

From a wider perspective, some take the view that DCEP can be used as a weapon against the US in an economic war. This is because as DCEP becomes accepted across the Belt and Road, China will have the power of total surveillance and control over the economic activity of potentially half the world’s population. DCEP will allow China to track everyone’s spending and transactions, and can seize or lock customer’s digital assets in their mobile wallets. We’ve already seen this in China, where together with its “social credit system”, millions of individuals have already been barred from purchasing airline tickets using their mobile wallets.

Will Coronavirus affect the launch of DCEP?

Original release publications stated that DCEP will begin it’s trial run in Shenzhen by the end of 2019. Unfortunately, this test date has been missed as we enter 2020 without a test run of DCEP. With the Coronavirus pandemic, expectations for a major announcement on DCEP in Q1 of 2020 did not materialise. However industry insiders are expecting DCEP to launch in 2020, albeit later in the year.

Although delayed, the road is still being paved for the launch of DCEP. The Global Times reports that according to industry insiders, the PBoC have collaborated with private companies to complete development of DCEP’s basic function and is in the process of drafting the relevant legislation for its circulation. Those with inside information on Alipay, the financial arm of Alibaba also revealed information on the 5 patents publicised by Alipay in relation to DCEP between January to March 2020. These patents pertain to the basic functions of DCEP, including its circulation, payment, issuance and an anti-money laundering function. The insiders also consider that with the publication of the patents, the technological development stage of DCEP is already complete. However they note the next stage of formulating the digital currency legislation and working with regulators on supervision of DCEP may be a lengthy process. Thus bringing uncertainties as to when exactly DCEP would be launched.

Note: Previous publications have referred to the national currency as CBDC.
Update: March 30 2020, updated on current progress on DCEP’s development



  1. Hi Michael, thanks for this information, really interesting. I was curious about the NFC contact-based payments and how it will work. From my understanding, iPhones probably will not allow the peer-to-peer communications. How will these devices be included? Perhaps QR-based transfers that are already common?

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