China’s PBoC Publishes Distributed Ledger Technology (DLT) Specification
On February 22, China’s central bank, PBoC, published a specification to standardize the use of distributed ledger technology (DLT) in the financial field. Specifically, the new regulation outlines the consensus mechanism, privacy protection, identity management, regulatory support, nodes communication, and more. Also, the Chinese proposed the DLT applications will feature the tamper resistance, as the same as that in the blockchain technology. Notably, according to the specification, the Chinese government will adopt effective user identity management and collect necessary data from users in the future application of DLT, which may injure the part of the anonymity of the blockchain. The Chinese government can know each digital currency account associated with the person due to the real-name mechanism, but the normal citizen cannot understand who is behind each nameless account, keeping the base anonymity of the blockchain.
However, the PBoC didn’t mention its testing central bank digital currency (CBDC) and digital currency electronic payment (DCEP) in the newly released DLT specification. Citing the earlier announcement from Sweden’s central bank, its CBDC may adopt DLT as the core technology. Therefore, the launch of the Chinese DLT specification may imply the Mainland is further pushing the development of the DCEP. After the debut of Chinese or other countries' CBDC, the world’s settlement, trade finance, and property rights transfer systems would face a great transformation and give global citizens a more friendly and convenient trading network. Moreover, the CBDC launch will boost the cryptocurrency market by lowering entry barriers and bringing more capital inflows.