Chinese citizens will be able to store digital yuan in hardware wallets

China’s central bank digital payments system (DCEP) envisions using both mobile wallets and standalone hardware wallets. The details were contained in the terms of use for the digital yuan, which CoinDesk studied.

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At the end of August it emerged that one of the country’s largest banks, China Construction Bank (CCB) opened registrations for wallets for the digital yuan. After the ensuing buzz, the financial institution disabled the service after a short time. In the meantime, the publication managed to study its description.

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Journalists found that in the CCB’s DCEP app, in addition to mobile wallets, standalone hardware wallets are also mentioned. With this option, users will be able to store larger sums of digital yuan offline, without relying on a third-party mobile application. For the latter, they will delegate smaller transactions to it.

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According to the terms of CCB, the hardware wallet is a physical information carrier, which is activated at the user’s request in the bank or via the DCEP digital channel.

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Unlike a real cash wallet, hardware wallets can be tracked and lose anonymity. For their activation and use, personal information such as identifiers and phone numbers will be required.

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Key functions of the hardware wallet:

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• making payments;

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• deposits to bank accounts or withdrawals;

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• transferring/receiving digital yuan from other wallets.

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The conditions stated that in the future a four-level system may appear that will set limits on such operations.

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The publication notes that, for example, for the second level the maximum balance will be capped at 10,000 yuan (~$1,500), the daily transaction volume must not exceed 5,000 yuan (~$750), and daily and annual spending amounts are 10,000 and 300,000 yuan respectively (~$1,500 and $42,000).

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Earlier, participation in the digital yuan trials confirmed by all four state-owned major banks — Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China and China Construction Bank.

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In August, authorities presented an expanded list of regions that will participate in the wide-scale trials of the digital yuan. In addition, the PRC Ministry of Commerce announced expansion of DCEP tests to large commercial transactions.

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