Chinese e-commerce giant Alibaba Group Holding Limited’s (NYSE:BABA) affiliate Ant Group is among the first privately-run businesses to be included in China’s digital currency trials, CNBC reported Sunday.
What Happened: MYbank – an online bank backed by Ant Group – has permitted some users to link their account with China’s digital yuan app, according to the CNBC report that state-backed China Securities Journal. MYbank had over 35 million small business and individual clients as of the end of 2020.
Some users can access the feature through Ant’s Alipay app, one of the two primary mobile pay apps in China. Consumers in the country widely use mobile payments.
China’s central bank — The People’s Bank of China (PBOC) — has distributed several million dollars worth of digital currency over the past year through an app that is connected with six major state-owned banks, as per CNBC.
Why It Matters: China is testing the digital yuan - also called e-CNY - in major cities across the country. The digital currency, to be issued and controlled by the PBOC, is intended to replace the cash and coins in circulation.
Unlike Bitcoin (BTC) and other cryptocurrencies, the Chinese digital yuan allows officials to track all digital cash in circulation.
The trials have allowed select users to buy products from participating brick-and-mortar stores as well as Alibaba’s rival JD.com Inc.’s (NASDAQ:JD) e-commerce app. It was reported in December that JD.com became China's first platform to begin accepting a digital version of the yuan.
Nevertheless, Ant’s participation in the digital currency trials comes despite increased regulatory scrutiny of Alibaba since last year.
Alibaba, the Jack Ma-co-founded company, was hit with a record $2.8 billion fine in April for abusing its dominant maker position in the country. The company’s popular UC internet browser was also removed by several internet companies from their app stores in China in March.
Price Action: Alibaba Group shares closed almost 0.5% lower on Friday at $225.31.