Huawei is incorporating China’s digital yuan, a central bank digital currency (CBDC), into its HarmonyOS NEXT operating system.
The integration aims to enhance accessibility for an estimated 1 billion smartphone users, streamlining the use of digital yuan through Huawei devices.
The HarmonyOS NEXT, also referred to as HarmonyOS 5.0, was officially unveiled on October 22, 2023.
HarmonyOS NEXT Marks Huawei’s Third Operating System
HarmonyOS NEXT marks Huawei’s third operating system and the first developed entirely in-house.
Positioned as the third most popular operating system globally—trailing only Android and iOS—HarmonyOS NEXT is designed to support applications specifically built for HarmonyOS, differentiating it from its predecessors.
The development of HarmonyOS followed Huawei’s restrictions imposed by the U.S. government in 2019, which prompted the company to innovate beyond Google’s ecosystem.
Initially rolled out for smart TVs and wearables, the operating system began to penetrate the smartphone market in 2021, with plans to integrate the digital yuan already on the horizon at that time.
With this latest integration, users will not be required to download a separate digital yuan app, making the CBDC even more user-friendly.
Enhancements in wallet management and interoperability with other financial applications are also anticipated.
Furthermore, plans are in motion to embed the digital yuan within various chips and Internet of Things (IoT) devices, thereby broadening its functionality across numerous platforms.
The People’s Bank of China will benefit from improved security and monitoring through this integration, reinforcing its capabilities in overseeing digital currency transactions.
The digital yuan has been making gradual yet notable advancements, recently featured at events such as the 2024 China Science Fiction Conference and the Craft Beer Festival in Beijing, where local residents hold approximately 22.6 million digital yuan wallets.
In a notable move for the international aviation sector, the International Air Transport Association (IATA) announced on October 29 that it would start accepting digital currencies, with the digital yuan being the inaugural choice.
According to IATA’s senior vice president, Muhammad Albakri, “China is one of the most advanced countries in the world in the adoption of digital currency.”
The digital yuan will become the 74th currency processed by IATA as the organization prepares for its integration by year’s end.
China to Revise AML Law to Address Risks Associated with Virtual Assets
China announced earlier this year that it is set to revise its outdated Anti-Money-Laundering (AML) law in a bid to tackle the increasing risks associated with virtual assets.
The move came after the country’s AML legislation has remained largely unchanged since its enactment over 17 years ago, failing to account for the advent of cryptocurrencies like Bitcoin.
According to Andrew Fei, a partner at law firm King & Wood Mallesons in Hong Kong, revising China’s AML law to address risks associated with virtual assets is deemed necessary, given the significant evolution of international standards and best practices.
The Financial Action Task Force (FATF), an intergovernmental body combatting money laundering and terrorist financing, has already provided detailed recommendations to address virtual assets in the proposed AML law amendment.
Although the FATF rated mainland China as “largely compliant” with virtual asset-related AML recommendations, the country’s prohibition of crypto activities exempted it from several criteria.
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