An examiner or auditor who finds an e-CNY payment in a firm's records asks two things: who identified the payer, and what the firm checked itself. The first answer sits with a bank in China. Wallets are opened through operator banks, and a PBoC paper of 1 November 2022 puts customer due diligence, record keeping and reports of large or suspicious transactions on those banks. The second answer has to come from the firm. The bank's checks cover its own wallet holder, and how much it knows varies: a wallet opened with a phone number alone has a low limit and no verified name behind it.
What is the digital yuan (e-CNY)?
China's central bank built the digital yuan as the country's own digital money. The PBoC's white paper on the e-CNY, published in July 2021, defines it as "the digital version of fiat currency issued by the PBOC and operated by authorized operators", with legal tender status. One e-CNY is one yuan, since the white paper gives the e-CNY and physical renminbi "the same legal status and economic value".
Crypto is a separate matter. A PBoC notice of 6 February 2026, issued with seven other agencies, says virtual currencies such as bitcoin have no legal tender status and treats crypto business in China as illegal financial activity. Of the 24 markets in the guide to cryptocurrency regulations by country, China is the only one where crypto is banned.
The names vary more than the money. The PBoC's abbreviation is e-CNY; digital renminbi, digital RMB, e-yuan and e-RMB mean the same thing. Renminbi is the name of China's currency and the yuan is its unit. DC/EP, short for digital currency electronic payment, was the framework the PBoC proposed in 2016 after research that began in 2014, as the Shanghai municipal finance office recounted in February 2026. A CBDC, or central bank digital currency, is money a central bank issues in digital form.
How does the digital yuan system work?
The e-CNY runs on two tiers. In the white paper's design the PBoC issues it to authorized operators, which are commercial banks, and those operators and other commercial institutions exchange it with the public and carry the payments. The operator group grew twice in 2026: 12 banks joined in April for a total of 22, and a PBoC notice of 17 August added eight more for 30, as Xinhua reported on 18 August 2026.
Wallets are personal or corporate. They run as software on a phone or as hardware such as a card, and the white paper says the e-CNY works offline and settles on payment. In an article carried by the Ningxia regional finance office, a PBoC deputy governor wrote in December 2025 that the e-CNY has both an account model and a blockchain model.
Who carries the AML duty for e-CNY wallets?
The operator banks do. The PBoC paper on managed anonymity, posted on 1 November 2022, calls them "the entities responsible for fulfilling the core AML/CFT obligations" and lists CDD, record keeping and reports of large or suspicious transactions. An operator may have a third party run CDD for it, but the final responsibility stays with the operator.
That duty covers the bank's own wallet holder. A payment firm, a bank or a crypto business that receives money paid out of an e-CNY wallet still checks its own customer and the counterparty: the name, the wallet the money came from and any sanctions exposure. For crypto and digital asset firms, complead, formerly Sanction Scanner, runs name, wallet and sanctions screening on one engine.
What changed for the e-CNY on 1 January 2026?
On 1 January 2026 the e-CNY moved from digital cash to deposit money.
Table 1. e-CNY 1.0 and 2.0, as of November 2026
| Feature | e-CNY 1.0 (to 31 December 2025) | e-CNY 2.0 (from 1 January 2026) | Source |
|---|---|---|---|
| Whose liability | The PBoC's | The commercial bank's | White paper 2021; Shanghai finance office, February 2026 |
| Money layer | Cash (M0) | Extended to M1 and M2 | White paper 2021; Shanghai finance office, February 2026 |
| Interest | None | Demand deposit rate on real name wallets (levels one to three), paid quarterly on the 20th of March, June, September and December | White paper 2021; Shanghai finance office, February 2026 |
| Deposit insurance | Not a bank deposit | Covered, up to 500,000 yuan | Xinhua, 29 December 2025; Shanghai finance office, February 2026 |
| Reserve requirement | Not counted | Balances at operator banks count toward the base; non bank payment institutions hold 100 percent reserves | Xinhua, 29 December 2025 |
| AML duty | Operator banks | Operator banks; e-CNY CDD and records follow separate provisions | PBoC paper, 1 November 2022; CDD Measures art. 52 |
The PBoC announced the change on 29 December 2025 under a new action plan, as reported by Xinhua: e-CNY held in commercial bank wallets became a bank deposit liability, with interest, deposit insurance and a place in the reserve base. Until then the white paper's rule held, and the e-CNY "carries and pays no interest", like cash. The Shanghai finance office gives the new definition as a commercial bank liability that is account based and compatible with distributed ledger technology. Interest is paid on real name wallets only, and users can see it in the e-CNY app.
Other e-CNY dates in 2026
- 1 January: e-CNY 2.0 starts. China's CDD Measures take effect the same day, followed by its beneficial owner measures on 20 January and its special preventive measures on 16 February.
- 6 February: the PBoC and seven agencies restate that virtual currencies are not legal tender and bar yuan pegged stablecoins issued abroad without approval.
- 25 March: Hong Kong reports 80,000 wallets and a wallet upgrade under study, in a reply to the Legislative Council.
- April and 17 August: operator banks rise to 22, then 30.
- 21 October: DCEPS and an e-CNY smart contract framework are presented at the 2026 e-CNY annual meeting, with the end September totals.
How anonymous is the digital yuan? Wallet levels and KYC
Partly. The white paper's principle is "anonymity for small value and traceable for high value", and the wallet levels put it into practice. Each wallet carries per transaction, daily and balance limits set by the strength of KYC, and the lowest level opens without any identity.
Level four needs only a phone number. The PBoC paper sets its single transaction limit at CNY 2,000 against an average bank card payment of CNY 603 in the second quarter of 2021, and calls that sufficient for the public's anonymous payments. Telecom operators may not arbitrarily disclose who stands behind the number to third parties, the PBoC included. Levels one to three are real name wallets, and their single transaction limit rises with the KYC level. Read from the firm's side, a single payment above CNY 2,000 came from a real name wallet, and a level four payer has no name the bank can pass on.
The bank may also hold less than a firm expects. Under normal conditions no other party has the right to obtain the transaction information, and an operator may apply for the data only when a suspicious transaction arises (PBoC paper). Monitoring still runs without a name. Operators must watch for anonymous wallets opened in bulk, structuring and frequent small transfers, and report suspicious transactions at any amount, even where no real name check was done.
How big is the e-CNY in 2026?
Its published totals are described differently from one release to the next, so each figure needs its date and what it counts. On 30 June 2021 the white paper counted more than 20.87 million personal and 3.51 million corporate wallets, 70.75 million transactions and about 34.5 billion yuan in value.
By the end of November 2025, China had recorded 3.48 billion cumulative e-CNY transactions worth 16.7 trillion yuan (Xinhua, 29 December 2025). The deputy governor's article that day added wallet counts. Personal wallets opened through the e-CNY app stood at 230 million, corporate wallets at 18.84 million.
By the end of September 2026, regions running e-CNY business had recorded 4.3 billion transactions worth about 31 trillion yuan in total. September alone brought 99.67 million transactions worth about 1.87 trillion yuan, up 12 percent and 123 percent on a year earlier, as reported by Xinhua on 21 October 2026 from the 2026 e-CNY annual meeting. That release words its total as overall transactions in those regions, unlike the November 2025 count, so the two figures are not compared as growth.
How does the e-CNY cross borders?
Picture a Hong Kong resident (illustrative) who opens an e-CNY wallet with a Hong Kong mobile number, tops it up through the Faster Payment System and pays a shop in Shenzhen. The wallet needed only the phone number. It cannot send money to another person.
That route opened on 17 May 2024, when the HKMA and the PBoC widened the e-CNY pilot in Hong Kong so residents could set up such wallets and top them up through 17 retail banks. The Hong Kong government's reply to the Legislative Council on 25 March 2026 counted five mainland wallet operators, 18 top up banks and about 5,200 local merchants accepting e-CNY, plus around 80,000 wallets registered by the end of January 2026 on the PBoC's information. The top up banks are in Hong Kong. They work under Hong Kong's own AML rules.
In 2021 the white paper said the e-CNY was designed mainly for domestic retail payments. In September 2025 an international operation center opened in Shanghai with cross border payment, blockchain service and digital asset platforms (Shanghai government, 26 September 2025). At the October 2026 annual meeting the infrastructure was presented in two parts: DCEPS, the central bank side system, and CBETS, the cross border settlement platform the international operation center runs (Xinhua, 21 October 2026).
What is mBridge, and where does it stand?
mBridge is a shared platform for cross border payments in central bank digital currencies, built on a blockchain called the mBridge Ledger. The BIS project page says it began in 2021 between the BIS Innovation Hub, the Bank of Thailand, the Central Bank of the United Arab Emirates, the PBoC's Digital Currency Institute and the HKMA. It reached the minimum viable product stage in mid 2024, and in October 2024 the BIS announced its handover of the project to the partners. The partners took it over.
In February 2026 the Shanghai finance office listed the core participants as the monetary authorities of mainland China, Hong Kong, Thailand, the UAE and Macao and their banks, with more members in progress. The same page gave the deputy governor's mBridge totals: by the end of November 2025, 4,047 cross border payments worth the equivalent of 387.2 billion yuan, about 95.3 percent of it in e-CNY.
What does the e-CNY mean for AML, KYC and screening at your firm?
Once e-CNY money reaches your customer or your books, eight checks stay with your firm, in its crypto AML program:
- Know who identified the payer. Operator banks run CDD, records and reports for their wallets (PBoC paper). China's CDD Measures, in force since 1 January 2026, leave e-CNY CDD and record keeping to separate "relevant provisions" (art. 52); a search of pbc.gov.cn and gov.cn on 11 November 2026 found none published. Why: your file names that bank.
- Run your own CDD. The FATF said, as the PBoC paper quotes it, that firms dealing in a CBDC carry "the same AML/CFT obligations as they do with fiat currencies or cash". In China, the AML Law, which took effect on 1 January 2025, requires financial institutions to set up a CDD system (art. 28). Why: one CDD file covers e-CNY, card and bank money alike.
- Ask where the money came from. Funds gathered from many level four wallets carry no verified names. Why: the source of funds answer fills that gap.
- Expect payer and payee data on cross border legs. Treat CBETS and mBridge payments like any cross border transfer: the travel rule expects originator and beneficiary data to move with it. Why: close a missing name before release.
- Screen both sides against the lists that bind. In China those are set by AML Law art. 40, as the China AML guide explains; for a US person, OFAC FAQ 560 says the obligations are "the same" for digital currency. Why: list duties apply whatever the rail.
- Match names in characters and pinyin. Client screening on complead matches transliterated names across Latin, Cyrillic, Arabic, Greek and Chinese and catches name order differences. Why: a Chinese name can arrive in either script, family name first or last.
- Watch split payments. The PBoC's bulk anonymous wallets and frequent small transfers are structuring at your firm. Why: limits invite splitting.
- Keep the record. File the payment reference, the operator bank or platform, the wallet level if known and your own checks. Why: the file answers both of the examiner's questions.
Can foreigners buy or hold the digital yuan?
Not as an investment. An e-CNY balance is yuan, so there is no digital yuan price to follow and nothing to buy on an exchange. Wallets open through the e-CNY app or an operator bank on the mainland, and outside it through the Hong Kong route above.
The FATF's guidance on virtual assets treats central bank digital currencies as digital fiat that "are not VAs" (paragraph 17), which keeps the e-CNY itself outside the rules for virtual asset service providers.
Anything sold as a yuan coin or a yuan investment app is not the e-CNY. The Financial Services Commission of Mauritius warned on 22 June 2021 that an entity named YuanPay Group claimed to be "the marketer of China's cryptocurrency in Mauritius" and had never been licensed or regulated by the FSC. Nor is it one of the 30 operator banks Xinhua listed in August 2026.
That leaves crypto itself. What China allows and bans, from exchanges and mining to yuan pegged stablecoins and tokenized assets, is the next question for a firm with China exposure.
