Yuan Crypto Investment: A Beginner's Guide To Getting Started

The digital yuan is China's electronic currency, issued by the People's Bank of China (PBOC). It is not a cryptocurrency and is only available to Chinese citizens. There are indirect ways for investors to gain exposure to the yuan, such as purchasing yuan directly and holding it in cash, investing in yuan futures or forward contracts, or buying exchange-traded funds (ETFs) that track the currency. Another option is to buy the Yuan Chain Coin (YCC) cryptocurrency, which can be purchased on platforms such as Coinbase and Binance.

Yuan Chain Coin (YCC)

YCC tokens can be traded on centralized crypto exchanges, with the most popular exchange being HitBTC, where the most active trading pair is YCC/BTC. The price of YCC is currently $0.001, with a 24-hour trading volume of $52.26. The coin is ranked 1624 among all known cryptocurrency assets, based on relative market cap.

To buy YCC, you can follow these steps:

• Find a reliable centralized exchange where you can buy YCC, such as HitBTC.
• Alternatively, you can use a decentralized exchange (DEX) that supports the blockchain where your YCC resides.
• Download and set up a Trust Wallet, which is the most integrated crypto wallet within the Ethereum network.
• Buy ETH as your base currency on Binance.
• Send the ETH from Binance to your Trust Wallet.
• Choose a DEX that supports your chosen wallet, such as 1inch.
• Connect your Trust Wallet to the DEX.
• Trade your ETH for YCC on the DEX.

Digital Yuan

The digital yuan, or Digital Currency Electronic Payment (DCEP), is a central bank digital currency (CBDC) issued by China's central bank, the People's Bank of China (PBOC). It is the first digital currency to be issued by a major economy and is designed to facilitate instantaneous domestic and international transactions at low cost.

The PBOC has been developing the digital yuan since 2014, and it has undergone public testing since April 2021. The currency is currently in its early trial stages and is not available for trading. Testing has been expanded to various cities in China, including Shenzhen, Suzhou, Chengdu, and Xiong'an, with plans to include more regions in the future. As of the end of June 2024, transactions using the digital yuan totalled 7 trillion yuan ($982 billion).

The digital yuan is linked to the legacy yuan in value but is designed for retail digital transactions in a centralised payment system. It can be controlled via smartphone apps and used for payments at select merchants, including Starbucks and McDonald's, as well as online shopping platforms. The currency can be accessed through "digital yuan" payment options on various platforms, including Alibaba's online grocery service and food delivery units.

The digital yuan offers several benefits, such as reduced operating costs and increased efficiency. It also has the potential to reduce money laundering, gambling, corruption, and terror financing. However, some critics view it as a form of Chinese government surveillance and control over users' financial transactions.

Yuan vs Renminbi

The Chinese currency is referred to by two names: the Chinese yuan (CNY) and the renminbi (RMB). The renminbi is the official currency of China, and the yuan is its principal unit of measurement. The yuan is also used in the names of other currencies, such as the New Taiwan Dollar and the Hong Kong Dollar.

The distinction between the two is subtle, and they are often used interchangeably. The renminbi is the name of China's currency, like sterling is the currency of Great Britain. A unit of renminbi is a yuan, like the pound is the basic unit of sterling.

The yuan is frequently used in Mandarin translations of foreign currencies. For example, the US dollar is translated as "mei yuan".

The modern-day Chinese yuan uses the abbreviation CNY to distinguish between the mainland currency and other uses of the word. The yuan is divided into 10 jiao or 100 fen. The largest banknote is 100 yuan, followed by 50 yuan, 20 yuan, 10 yuan, five yuan, and one yuan.

The renminbi was introduced in 1948 when the Chinese Communist Party established their new government after the Chinese Civil War. The currency allowed the new administration to unify the Chinese economy, which was then divided among several regional currencies.

The yuan is gaining greater acceptance worldwide, due to the Chinese government seeking a large role in global economic affairs. However, the Chinese government still controls and closely manages the value of the yuan.

Yuan ETFs

• WisdomTree Chinese Yuan Strategy ETF (CYB)
• Market Vectors Chinese Renminbi/U.S. Dollar ETN (CNY)
• CurrencyShares Chinese Renminbi ETF (FXCH)

Each of these ETFs has its own strengths and weaknesses, such as expense ratios and average bid-ask spreads. For instance, CNY has the highest expense ratio at 0.55% of assets under management (AUM) annually, while FXCH has the lowest at 0.40%. FXCH also has the lowest average bid-ask spread at 0.10%, making it the lowest-cost ETF in terms of transaction costs. CYB, the largest of the three funds by AUM, has the highest average daily volume and is the most liquid.

It is important to note that ETFs with low AUM may risk being shut down. As of 2024, investors may have a harder time finding ETFs offering exposure to the Chinese Yuan due to many of them being liquidated and delisted in recent years.

Yuan futures

Yuan/renminbi currency futures are traded on the Chicago Mercantile Exchange (CME). Futures options on the yuan are also available. Futures contracts can be used to speculate on currencies and commodities and have preset expiration dates and standardised terms, unlike forward contracts, which allow customisation.

The yuan's value is carefully managed by the Chinese government, and it is not a free-floating currency. This can cause problems for foreign companies and investors due to capital controls. However, as China continues to seek a larger role in global economic affairs, the yuan is gaining greater acceptance.

To invest in yuan futures, investors can refer to resources such as Coinmarketcap.com to find a reliable centralised exchange where they can purchase yuan-backed cryptocurrencies. A crypto wallet, such as Trust Wallet, is also necessary to store and trade the currency. Once the wallet is set up, investors can purchase a base currency, such as ETH, and then trade it for the desired yuan-backed coin on a decentralised exchange (DEX) that supports their chosen wallet.

Frequently asked questions