Blackburn Unveils Plan To Block Chinese Digital Currency From Government Devices

Tennessee senator joins chorus of bipartisan lawmakers sounding alarm on digital yuan

Sen. Marsha Blackburn (R., Tenn.) / Getty Images
August 5, 2021

Sen. Marsha Blackburn (R., Tenn.) took steps on Thursday to ban a new Chinese digital currency from government devices, arguing that China could use the currency to surveil people around the world.

Blackburn told the Washington Free Beacon that the ban, introduced as an amendment to the Senate's omnibus infrastructure bill, is needed to prevent China from stealing information.

"The People’s Bank of China is trying to use this as a way to hack into networks," Blackburn said. "Once you’ve got them in your wallet, you’ll have them in your wallet from now on."

China is rolling out the digital currency in an attempt to better surveil its users and to create an alternative to traditional financial systems backed by the U.S. dollar.

Lawmakers are sounding the alarm about the digital yuan ahead of the 2022 Olympics, where Chinese officials plan to test the currency more broadly. Blackburn, Sen. Roger Wicker (R., Miss.), and Sen. Cynthia Lummis (R., Wyo.) last month asked the U.S. Olympic Committee to ban American Olympians from using the currency at the Beijing games.

Blackburn told the Free Beacon the digital yuan is part of a larger push by China to displace the United States as a world leader. "We know that China is seeking to push the yuan as the currency that countries will peg to," she said. "We’re attentive to the aggressiveness they are exercising when they push this as the standard."

Blackburn’s amendment would give the Office of Management and Budget two months to develop standards to remove the digital yuan wallet app from government-issued devices.

Most digital currencies give users anonymity. But the digital yuan allows the Chinese Communist Party to monitor transactions in real time. Yaya Fanusie, an adjunct senior fellow at the Center for a New American Security, said, "The CCP recently released a notice that Mongolian families who didn’t send their children to state-mandated schools would be put on a blacklist. The digital yuan would allow the government to combine financial data with lists like that."

The lack of anonymity could allow the CCP to manipulate users in other ways. China has already experimented with setting expiration dates on some yuan to encourage users to spend them quicker.

Chinese officials have pushed back on American concerns about surveillance. Chinese foreign ministry spokesman Zhao Lijian told reporters on Tuesday that U.S. politicians should "figure out what a digital currency really is." He added, "The U.S. politicians should abide by the spirit stipulated in the Olympic Charter, stop making sports a political matter and stop making troubles out of the digital currency in China."

The People’s Bank of China says over 20.8 million people have opened a wallet to store digital yuan since China started testing the currency in 2019. The digital yuan is mainly used for domestic retail transactions, but the People’s Bank says it hopes to use it for cross-border transactions. Since the digital yuan is not denominated in dollars, its widespread use could make U.S. sanctions less potent.

China is not the only country to consider a digital currency. The European Union plans to create a digital euro. In response, both Treasury Secretary Janet Yellen and Federal Reserve chairman Jerome Powell have said they are looking into the possibility of a U.S. digital currency, although some experts have questioned whether the United States needs such a currency, given the dominance of the dollar.