The 2022 Winter Olympics, officially called the XXIV Winter Olympics, began on February 4 in Beijing, with cryptocurrencies becoming a major part of the event, in part due to the Chinese government’s ambitions for digital currency.
In recent years, the crypto community has not had a strong connection with the Olympics. The last major and highly publicized interaction came when the Dogecoin (DOGE) community helped fund a Jamaican bobsled team in 2014 so they could attend an event in Sochi.
However, the 2022 Winter Olympics will go down in history with the availability of non-fungible tokens (NFT), Bitcoin-backed athletes (BTC), and the launch of the world’s first major central bank digital currency (CBDC) and its potential use as a currency. A payment method in a country that effectively banned cryptocurrency trading and mining last year.
China’s digital yuan controversy
The 2022 Winter Olympics was to be a kind of digital yuan issuance, the Chinese CBDC. The People’s Bank of China, China’s central bank, has been testing the digital yuan in several areas for several years, allowing foreigners to use the digital currency during the event for the first time.
The digital currency can be used through the government’s e-CNY mobile app or through mobile payment platforms developed by the private sector, including WeChat, a Chinese messaging app with more than one billion users.
The app’s launch has reportedly been halted due to COVID-19 restrictions, which has seen athletes, officials and journalists largely separated from the rest of China in a quarantine “bubble” meant to prevent the spread of different virus strains. This bubble, along with the government’s limitation of viewership, appears to have led to a significant drop in the number of people testing the digital yuan.
Yuan digital banners inside the Olympic bubble. Source: Andrea Verdelli / Getty Images
However, other reports said that on the day of the opening ceremony, more transactions were made in digital yuan than Visa.
Transactions with the digital yuan have exceeded $13 billion since its launch, and by November 2021, nearly 10 million sellers have activated digital wallets. That number is negligible compared to Visa’s $12.5 trillion in size for the 12 months ending June 30, 2021.
In a letter to Cointelegraph, Fergus Hodgson, director of financial advisory firm Aecon Americas, said the Olympics “has become a marketing opportunity for governments, and they are usually at a loss,” adding:
“The digital yuan is just another fiat currency that deserves to be exchanged for special currencies, or at least sovereign currencies that were not built on slave labor and tyranny.”
The perceived threat from the digital yuan to dollar dominance has prompted US Secretary of State Anthony Blinken and Treasury Secretary Janet Yellen to warn against introducing the digital yuan into the Olympics, as it allegedly could threaten US interests. In July, a group of three senators sent a letter to the US Olympic and Paralympic Committee claiming that the Chinese Communist Party could use CBDC to spy on visiting athletes.
China’s digital currency is expected to provide the country’s government with new tools to monitor the economy and control more of the global digital economy.
Apparently agreed, David McCarville, director of law firm Finmore, told Cointelegraph that Chinese authorities “have cracked down on the crypto industry as a threat to its natural security” because the “decentralized nature of cryptocurrency” undermines the Chinese government and its needs. For “Data Monitoring and Financial Transaction Monitoring for Financial Supervision”.
McCarville noted that there is “evidence that the Chinese government intends to use the digital yuan to expand economic surveillance activities,” adding:
“With the digital yuan, the user is subject to constant monitoring as well as potential exposure to malware and viruses. Without a clear understanding of the proprietary code used to create the digital yuan, it is almost impossible to make an informed decision.”
According to Eli Taranto, director of business development at digital bank EQIBank, the collapse of China’s cryptocurrency may not be related to CIB. He told Cointelegraph:
“Cryptocurrency is a kind of massive revolution that is changing some of the balances that existed until recently. Obviously not everyone is in favor of this kind of transformation, but in the end they will not be able to stop it, no matter how hard they try.