China prepares to launch the first domestic cryptocurrency

China has announced it is ready to roll out the world's first digitized domestic currency, attracting the attention of financial service industries across the globe, despite a lack of available details.

The cryptocurrency's launch through the Digital Currency Electronic Payment (DCEP) project will ignite a race between commercial banks to provide the best cryptocurrency services, a Chinese central bank official told Reuters.

The DCEP project will be powered and secured in part by blockchain technology, much like bitcoin and Facebook's proposed digital currency, Libra.

In his October testimony to the US Congress, Facebook CEO Mark Zuckerberg pressured lawmakers to allow Libra's launch to move forward, arguing that "while we debate these issues the rest of the world isn't waiting," and adding that "China is moving quickly to launch similar ideas in the coming months".

In line with the DCEP project's two-tier approach, the People's Bank of China will first issue the cryptocurrency to commercial banks, then those institutions will send it to the public.

"During the research period, and also the issuance period there will be a horse race approach," the central bank's head of digital currency research Mu Changchun told a Hong Kong forum. "The frontrunner will take the whole market - who is more efficient, who can provide a better service to the public - they can survive in the future."

Mu anticipated that if one commercial bank takes the lead, it is likely that "the technology they use will be adopted by other parties".

The digital currency will allow even more oversight for Chinese regulators over the country's monetary flow, as well as protecting China's capital borders and prevent illegal cash flows as other global payment systems emerge that could threaten the currency's sovereignty.

The EU has stalled Libra's launch since Facebook announced the project in June, fearing the risks a private digital currency might pose to the financial sector, and backed a public alternative instead.

The EU has now drafted a document urging the European Central Bank to issue a public cryptocurrency and develop a common approach to digital currencies to help regulate the new monetary form.

Regulators initially ignored stablecoins because of how small they were, but Facebook's announcement of Libra - a cryptocurrency with billions of potential users - sparked a global push for regulation of private digital currencies in public financial markets.

The new EU document, due to be discussed by finance ministers on Friday, reiterates potential threats of private currencies, including money laundering, cybersecurity, the functioning of payment systems, taxation, and cyber security.

"At the very least, we need a robust regulatory framework to deal with virtual currencies," said the financial leader of the largest EU Parliament grouping, Markus Ferber. "The (executive EU) Commission has been way too ... complacent on the issue so far. With the threat of Libra on the horizon, it is time for action now."