February 04, 2022

With Digital Yuan Rollout at Olympic Games, Toomey Calls on Federal Agencies To Closely Watch for National Security Implications

Washington, D.C. – As China prepares to debut its Central Bank Digital Currency (CBDC) at the Beijing Winter Olympics on Friday, U.S. Senate Banking Committee Ranking Member Pat Toomey (R-Pa.) wants U.S. agencies to pay close attention to how the digital yuan might affect both U.S. economic and national security interests.

In a letter to Department of the Treasury Secretary Janet Yellen and Secretary of State Antony Blinken, Ranking Member Toomey wrote:

“While the United States is still evaluating the concept of a digital dollar, China is using the Beijing Winter Olympics as an international test for the digital yuan (eCNY), which has been piloted domestically since 2019. In the Olympic Village, athletes and visitors will only be permitted to transact in cash, Visa, and eCNY. Ahead of the games, the Chinese government is reportedly pressing U.S. companies like McDonald's, Visa, and Nike to install eCNY systems.”

As the Senator notes, communist China has also launched the first state-backed global distributed ledger infrastructure, the Blockchain-based Services Network (BSN), designed to be the state-controlled blockchain internet and technological backbone of China’s Belt and Road Initiative. Both Beijing’s CBDC and BSN could undermine economic and national security.

“Analysts have raised the eCNY’s potential to subvert U.S. sanctions, facilitate illicit money flows, enhance China’s surveillance capabilities, and provide Beijing with ‘first mover’ advantages such as setting standards in cross-border digital payments,” Ranking Member Toomey notes.

While China’s CBDC raises concerns, Senator Toomey emphasized that Beijing’s crackdown on private cryptocurrencies provides an opportunity for the U.S. to be at the forefront of digital innovation while protecting democratic principles like personal privacy.

“Though the Chinese Communist Party appears determined to leverage the technology underlying digital assets, Chinese regulators have banned cryptocurrency activities in mainland China, viewing decentralized and permissionless network money as a threat to Beijing’s digital authoritarianism,” Senator Toomey wrote. “China’s crackdown presents an opportunity for the United States to be the forerunner of crypto innovation, grounded in individual freedom, and other American and democratic principles.”

Ranking Member Toomey requested Treasury and State closely examine Beijing’s CBDC rollout during the Olympic Games and provide a full briefing by March 7, 2022.

To read Ranking Member Toomey’s full letter to Secretary Yellen and Secretary Blinken, click here.