China’s Central Bank is Creating its Own Cryptocurrency in Response to Facebook’s Libra

China’s central bank is creating its own cryptocurrency in response to Facebook’s Libra, said director of the People’s Bank of China’s (PBOC) research bureau Wang Xin.

China’s stance towards Bitcoin, and cryptocurrency in general, has been hostile—and understandably so. China tightened capital controls in the wake of a shock yuan devaluation in 2015 and has continued to implement measures to mitigate capital flight out of the country. Some of these measures include increased disclosure requirements for buying foreign currencies and tightened restrictions on corporate investments overseas.

These measures culminated in a blanket ban on cryptocurrency exchanges and ICOs in September 2017 and Bitcoin mining in April 2019. Part of the reason for these bans is to help policymakers prevent a downward spiral in yuan depreciation against international currencies facilitated via cryptocurrency.

These policies are necessary so long as China wishes to maintain a peg against the U.S. dollar and set independent interest rates.

Now, Facebook’s Libra with its base of 2.4 billion monthly active users, poses another threat to Chinese capital controls.

Considering Facebook is beholden to pressure from U.S. policymakers, it is in China’s interest to ensure Libra does not take hold in the country. Facebook’s services are already blocked in China and it’s unclear whether users outside of Facebook will have incentive to adopt Libra.

PBOC is working with market institutions to create a central bank cryptocurrency, with approval from the State Council. A digital currency similar to Facebook’s could help China’s central bank maintain control over its economy.

Such an asset would pose few benefits for holders over the country’s already ubiquitous WeChat and Tencent digital payment options. (Neutral)

Bitstamp Sets Up Lightning Network Node

European crypto exchange Bitstamp has set up its own Lightning Network (LN) node to boost the network’s capabilities.

As a second layer over the bitcoin blockchain, the LN is designed to enable fast and zero-fee transactions by creating payment channels between users. Specifically, the network aims to address bitcoin’s scalability problem by keeping the majority of transactions off-chain.

By launching its own LN node, Bitstamp aims to promote the growth of the network, as well as encourage the crypto industry to adopt the technology, the firm wrote in an official announcement.

Bitstamp said that bringing more nodes to the LN will keep the network active, describing the nodes as its basic building units. As more nodes generate payment channels, the total network liquidity increases, which in turn increases the transactions capabilities on the network, Bitstamp explained. (Positive)

Boost For Bitcoin Incoming As Fidelity Explores Blockchain And Trading Desk Nears

Fidelity International, a subsidiary of Fidelity Investments, is edging closer to entering the crypto space in what could be a major boost for bitcoin. Fidelity Investments has $7 trillion in assets under management.

Fidelity Investments has already set up a custody operation called Fidelity Digital Assets.

A report in the Financial News says someone familiar with the matter has confirmed that “staff across various parts of the international business” are investigating blockchain tech.

Also, according to the newspaper the parent company is close to getting its trading desk up and running.

Further evidence of rising crypto-friendliness at one of the world’s biggest fund managers comes from the fantasy crypto trading game it’s been running internally for staff at the international arm.

Starting off with £10,000 in virtual money, players are tasked with building a portfolio of crypto. Those who end up with the largest returns are eligible to win cash prizes.

Institutions are already showing heightened interest in the crypto market, especially bitcoin, and are thought to be among the key buyers when the price was under siege during the “crypto winter. Fidelity Digital Assets will have helped institutions to on board into the sector.

A trading desk and news that the international arm is looking to either launch products or use distributed ledger technology for its back-office operations, will confirm its leadership role in the fund management industry. (Positive)