China Digital Yuan Expansion in 2025: Key Developments and Challenges

China Digital Yuan: Overcoming Setbacks and Paving the Way for 2025

China Digital Yuan– China’s central bank digital currency (CBDC), the digital yuan, has experienced a quieter year in 2024, following its initial surge in attention. However, experts predict a stronger push for its international growth in 2025. Winston Ma, an adjunct law professor at New York University and former managing director at China’s sovereign wealth fund, suggests that China is poised to accelerate the digital yuan’s global expansion, despite recent challenges.

Digital Yuan Faces Setbacks but Remains a Key Focus

In 2024, China made slower progress in expanding the digital yuan, particularly within Hong Kong’s retail sector. This slowdown coincided with the investigation of Yao Qian, the former head of the People’s Bank of China’s Digital Currency Institute. Yao was accused of accepting cryptocurrency bribes, which raised questions about the integrity of the digital yuan project. However, China remains committed to advancing its digital currency. In a significant announcement at the third plenum, President Xi Jinping and the Communist Party’s Central Committee emphasized the importance of internationalizing the yuan, with the digital yuan at the forefront.

Digital Yuan’s Overseas Expansion Faces US Resistance

Winston Ma also highlighted that China’s CBDC expansion may encounter opposition from the United States, especially given the ongoing defense of US dollar supremacy by figures like Donald Trump. In addition to expanding retail use, China has tested cross-border digital yuan payments with Singapore and is involved in the mBridge project—a cross-border wholesale digital currency initiative with several countries, including Thailand, UAE, and Saudi Arabia. However, the Bank for International Settlements (BIS) withdrew from the project in 2024, citing concerns over the potential use of mBridge by BRICS nations to bypass international sanctions.

South Korea’s Crypto Market Sees Retail Growth, Institutional Adoption Delayed

Meanwhile, South Korea’s cryptocurrency market has solidified its position as a major player in 2024, with the Korean won leading global fiat-to-crypto trading pairs. However, the country’s crypto market remains largely driven by retail investors, as institutional participation is hindered by strict regulations. South Korean corporations face difficulties in accessing fiat-to-crypto services due to local Anti-Money Laundering (AML) laws, and the prohibition of crypto ETFs further limits institutional involvement.

Ki Young Ju, CEO of CryptoQuant, notes that while retail adoption in South Korea is strong, institutional growth lags behind other developed nations. He predicts that institutional adoption will likely accelerate after the country finalizes its crypto taxation laws, which have been delayed until 2027.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.