On January 1, 2026, at 8 AM UTC+8, China's digital renminbi system will undergo a significant upgrade—the digital renminbi wallet balance will start to accrue interest in a demand deposit manner. This change allows the digital renminbi, which previously resembled "electronic cash," to substantively enter the functional space of "deposit currency" for the first time, blurring the previously clear boundaries: wallet or account, payment tool or deposit product, are being redefined. At this turning point, on one side, the central bank digital currency is continuously enhancing the controllability and programmability of funds along the centralized account route, while on the other side, the narrative conflict surrounding decentralization and censorship resistance built by cryptocurrencies like Bitcoin over the past decade is becoming increasingly sharp. Against the backdrop of a panic and greed index that has fallen to 27 and a clear cooling of overall risk appetite, the long-term game between interest-bearing, programmable, sovereign credit-backed legal digital currency and high-volatility, decentralized crypto assets will inevitably be re-examined by the market.
Wallet Interest Launch: Digital Cash Transforms into Digital Deposit Currency
Before the interest function was launched, the digital renminbi was closer to a non-interest-bearing "digital cash," emphasizing payment efficiency, instant settlement, and offline circulation, logically corresponding to the electronic extension of paper money and coins. Starting from January 1, 2026, the introduction of interest on demand deposit terms significantly compresses the boundary between digital renminbi wallets and traditional bank demand deposits: as long as funds remain in the wallet, they can generate interest returns, expanding its financial attributes from "payment medium" to "value storage." The so-called "interest calculated on demand deposit terms" has not disclosed specific interest rates and tiered rules, but it can be confirmed that the interest calculation method is roughly similar to that of bank demand deposits, meaning users have an incentive to keep more funds in their digital wallets for a longer period regarding fund aggregation, small change management, and reserve fund allocation. This incentive is expected to increase the duration and scale of funds held within the wallet system.
As a result, there is a consensus in the market that "the digital renminbi is transitioning from the digital cash era to the digital deposit currency era," emphasizing that this is not just a minor adjustment to the functional menu but a forward shift in institutional positioning. It touches on the hierarchy of currency and the structure of the financial system: when a tool originally viewed as a cash substitute begins to possess deposit yield attributes, the division of labor between traditional bank deposits, payment accounts, and electronic wallets will be rewritten. In this arrangement, the role of commercial banks is also quietly changing. Previously, banks were seen more as "channel-type" participants in the issuance and circulation of digital renminbi, opening wallets for users and providing interface services; after the introduction of interest, banks essentially become the accounts and interest carriers for this portion of digital currency, needing to find a clear position for digital renminbi wallet balances within their own balance sheets, fund position management, and product systems. This shift from "channel" to "account and interest carrier" indicates that the digital renminbi is being more deeply embedded within the existing commercial banking system, rather than remaining a lightweight innovation at the payment level.
The Deep Waters of Programmable Interest and Directed Payments
Almost simultaneously entering the public eye with the interest function is the smart contract system already deployed for the digital renminbi. According to existing information, this system supports programmable functions such as directed payments, allowing funds to be automatically executed for specific purposes under preset conditions. When "wallets start to accrue interest" overlaps with "programmable payments," the digital renminbi is no longer just a passive tool for storage and transfer, but more like a sophisticated infrastructure for fund scheduling and control, with its monetary policy toolbox extending down to the terminal wallet level.
In specific scenarios, the most intuitive imagination of this directed payment capability comes from various fiscal disbursement and subsidy mechanisms. For example, a certain industrial support fund can be distributed to enterprises or individuals' wallets in the form of digital renminbi, while embedding conditions such as "can only be spent at designated merchants, must be used within a certain time frame," thus preventing funds from being diverted to speculation, real estate, or areas that do not align with policy directions. Similar logic can be applied to social security subsidies, education funding, and even local government consumption vouchers: funds come with "usage tags" and "time tags" from the outset, circulating within a controllable range, forming a more binding closed-loop management of fiscal expenditure direction. This capability of "money carrying rules" may reshape the way and efficiency of fiscal funds being allocated, partially transforming processes that originally relied on manual review and post-event supervision into automatic execution and in-chain verification through smart contracts.
Once interest itself is also included in the programmable space, the imagination will be further elevated. Theoretically, differentiated interest rates and directed incentives can be set for digital renminbi wallets based on different groups, purposes, or regions, for example, providing additional returns for balances held in certain types of wallets during specific periods, guiding funds towards a particular industry, region, or consumption scenario. This will allow interest rate policies to partially descend from the macro level of interbank and deposit-loan markets to become micro-incentive tools that can be "precisely deployed," enhancing the precision and operability of monetary policy in structural regulation. Of course, relevant details have not yet been disclosed and remain largely at the theoretical possibility level, but the logic is already clear enough: when "interest + purpose" can both be written into code, the digital renminbi wallet possesses the technical premise to become a "policy execution terminal."
However, the other side of highly programmable funds is that usage trajectories and behavioral paths are comprehensively recorded and can be retained for a long time. Under the logic of directed payments and differentiated interest rates, every expenditure and every type of income structure may be precisely mapped to the profile of individuals or institutions. For regulators aiming to improve macro-control efficiency and combat violations, this represents unprecedented visualization and controllability; but from the perspective of privacy rights and financial freedom, it also means that the space left for individuals in economic life to remain "invisible" is significantly compressed. Every step the digital renminbi takes towards programmability will push the discussion surrounding privacy, efficiency, and security boundaries to new heights.
The Choice of Centralized Accounts Abandoning Blockchain
Unlike most crypto assets based on public chains or distributed ledgers, the digital renminbi has clearly chosen not to rely on blockchain technology from the outset, instead adopting a centralized account system maintained by the central bank and commercial banks. This architecture means that the bookkeeping rights are highly concentrated within the "central bank—commercial bank" closed loop, with data storage, account adjustments, and system upgrades managed by a few specific nodes, distancing itself from the public chain world's ideals of "open consensus" and "multi-party verification." From a design philosophy perspective, this centralized account system stands in stark contrast to decentralized public chains, with the former emphasizing controllability, compliance, and policy execution efficiency, while the latter claims to resist single-point control and arbitrary tampering through technological distribution.
On decentralized public chains, bookkeeping rights are dispersed among numerous participants through mechanisms such as computing power or staking, with on-chain history regarded as "immutable" public records, requiring majority consensus for any changes, which is costly. In the centralized account system of the digital renminbi, "consensus" is more reflected in governance rules within regulatory and financial institutions rather than in the computational competition or token voting of an open network. The immutability of the ledger primarily relies on institutional and internal controls rather than algorithmic games to constrain all participants. This means that when there is a need to urgently freeze, trace, or adjust a certain fund, regulatory authorities can quickly execute actions within the legal authorization framework through technical systems, without waiting for a distributed network to reach broad consensus.
This centralized structure greatly amplifies the regulatory authorities' control over monetary sovereignty and the flow of funds. For objectives such as combating money laundering, terrorist financing, and cross-border illegal fund flows, the digital renminbi's account system provides an efficient "regulation as a service" foundation: it can quickly freeze suspicious funds when necessary, restore fund paths in real-time, and rapidly implement policy adjustments through smart contracts or rule engines. In traditional paper currency and some electronic payment systems, such operations are often limited by data fragmentation, system disconnection, and cross-institutional collaboration efficiency, while centralized digital currency inherently possesses higher centralized scheduling capabilities.
However, this route choice also sends a clear signal to the outside world: in the global competition for central bank digital currencies, technology is not a value-neutral tool but a means serving political goals and regulatory frameworks. The digital renminbi deliberately maintains distance from the public chain world in its architecture, reinforcing sovereign credit and regulatory coordination rather than "on-chain autonomy" or "open-source neutrality." This serves as a reference for other countries planning central bank digital currencies—whether to continue using the existing account system and emphasize central control, or to attempt to find some compromise within distributed ledgers, reflecting different judgments on monetary sovereignty, security boundaries, and tolerance for financial innovation.
The Moment of Crypto Narrative Benchmarking
Since its inception in 2009, Bitcoin and subsequent crypto assets have continuously constructed a monetary narrative anchored in technology: decentralized accounting structures weaken the control of a single institution, censorship-resistant transfer channels provide funds with an "exit" from traditional systems, and fixed issuance limits and transparent rules are packaged as the value anchor of "digital gold." In this narrative, currency is no longer just a credit carrier monopolized by the state but a new type of asset that can spontaneously form in code and open networks, which has been an important spiritual pillar attracting capital, developers, and users to the crypto market over the past decade.
In contrast, the positioning of the digital renminbi is closer to a programmable policy tool. Backed by sovereign credit, its issuance and circulation are strictly within a regulatory framework, while smart contracts and directed payments are used to enhance the efficiency of macro-control and the precision of fiscal expenditure. On the two core dimensions of "freedom and efficiency" and "anonymity and controllability," the digital renminbi and crypto assets represented by Bitcoin stand almost at opposite ends of the spectrum: the former aims to fully bring financial transactions into a visible, traceable, and intervenable track, while the latter seeks to retain a relatively independent space from traditional systems at the technical level.
Current market sentiment also provides a special backdrop for this benchmarking. According to public data, the cryptocurrency fear and greed index has fallen to 27, indicating a clear "fear" zone and showing that overall risk appetite is weakening. In such an emotional environment, some funds often tend to flow back to asset classes perceived as safer and more creditworthy. In the domestic context, this choice is likely to manifest as: some funds that might have flowed into high-volatility crypto assets instead favor the digital renminbi, which is issued by the central bank, starts to accrue interest, and is highly integrated with daily payment scenarios, especially as it gradually expands into offline retail and public service payments; its combination of "safety + convenience + returns" is expected to strongly attract conservative funds.
Thus, an open and sharp question is posed to the crypto world: when a national-level digital currency not only offers high convenience but also adds interest returns and programmable functions, what new narrative can crypto assets rely on to defend their existence? Is merely emphasizing decentralization and censorship resistance sufficient to support a large asset class's continued expansion in the face of tighter regulation and more mature financial infrastructure? Or does the crypto world need to shift from a "confrontational narrative" to a "complementary narrative," seeking a reasonable position coexisting with sovereign digital currencies in asset diversification, cross-border settlement, or specific scenarios? The answers to these questions may determine the main line of the next crypto cycle.
The Dual-Track Competition of Global Geopolitical Underpinnings
Shifting the perspective from domestic to global, it can be seen that the construction of a centralized digital currency system goes far beyond enhancing the "precision" of domestic monetary policy tools; it is also laying the infrastructure for future competition in cross-border payment and settlement systems. As more and more countries advance central bank digital currency pilot programs and issuances, the digital form of their currency will directly affect its ease of use and network effects in cross-border trade and financial exchanges. For the digital renminbi, an efficient and controllable centralized account system can not only strengthen domestic monetary sovereignty boundaries but may also provide more attractive technological and cost advantages in cross-border settlements with other currencies.
At the same time, crypto assets are quietly being included in the macro asset allocation discussions by some sovereign nations. According to public statements by Cathie Wood, founder of ARK Invest (from a single source), the idea that "the U.S. government may start directly purchasing Bitcoin" is circulating in the market. Regardless of how far this idea is from reality, it indicates that the relationship between sovereign nations and crypto assets is evolving from a singular regulatory object to a more diverse and complex role combination—serving as both a potential source of risk and a possible reserve asset and part of a technological strategy.
Thus, on one side is the sovereign digital currency system represented by the digital renminbi, attempting to reshape the payment and settlement landscape within the existing fiat currency framework through technological upgrades; on the other side, crypto assets are gradually transitioning from "marginal speculative products" to "potentially included in some countries' reserves." These two paths are evolving in parallel, forming a dual-track competitive landscape for the future global monetary system. In this framework, the design of capital cross-border flow paths, optimization of foreign exchange reserve structures, and adjustments in countries' reliance on the dollar system may all be reassessed over a longer time scale—some countries may build a more diversified reserve portfolio among dollar assets, other sovereign digital currencies, and certain crypto assets to hedge against geopolitical and financial sanction risks.
From a more macro perspective, the promotion of interest-bearing, programmable, and centralized account systems for the digital renminbi, combined with the global cognitive diffusion of assets like Bitcoin, collectively exerts implicit pressure on the traditional U.S. dollar-centric international monetary system. Future competition will no longer only concern nominal exchange rates or interest differentials but will involve a comprehensive contest of an entire set of technology stacks, policy tools, and asset types. Whoever can find a better balance between efficiency, security, sovereign control, and asset attractiveness will have the opportunity to take the initiative in the next round of global monetary order reassessment.
After Interest: The Next Step for Digital Renminbi
Returning to the starting point, the interest policy implemented from January 1, 2026, marks an important leap in the functional spectrum of the digital renminbi. When the mechanism of "interest calculated on demand deposit terms" overlaps with the previously established programmable payment capabilities, the digital renminbi is upgrading from a mere payment tool to a "policy-controllable digital deposit currency": it possesses the high-frequency usage characteristics of daily payments and transfers while embedding interest and rules, providing a pathway for macro-control and fiscal expenditure to reach individual end users. Its significance goes far beyond just adding an "interest" field to the wallet interface; it extends the execution reach of monetary and fiscal policies to every user with a digital wallet.
In the medium to long term, this transformation will inevitably produce a chain reaction affecting commercial banks, user behavior, and fiscal expenditure models. For banks, the interest-bearing digital renminbi wallet balances may create some deposit diversion pressure, especially for small deposits that also exist in demand deposit form. In the future, banks will need to find differentiated positioning in product design, interest rate strategies, and value-added services to avoid being excessively squeezed by the "official wallet." In terms of account structure, personal and corporate funds may form new layered combinations among bank accounts, payment platform accounts, and digital renminbi wallets. How to balance security, yield, and payment convenience will become a new decision-making challenge for users regarding financial management and payments. For fiscal departments, leveraging directed payments and programmable rules to manage subsidies, transfer payments, and industrial support with finer granularity is expected to enhance fund utilization efficiency and will also pose new technical and institutional requirements for traditional budget execution and auditing processes.
Looking ahead, whether the digital renminbi can create a genuine "pull" effect on traditional deposits and crypto assets remains to be observed. Key variables include interest rates, which directly affect its attractiveness as a value storage tool; account limits and layered management rules, which determine its usage space in large funds and institutional funds; and scope of scenario openness, which relates to its penetration depth in retail payments, public services, cross-border settlements, and other dimensions. How these factors combine will gradually become clearer in the coming years, allowing us to better assess the real impact of the digital renminbi as a new form of currency on the existing financial system and the world of crypto assets.
It is certain that in the long-term competition for the digitalization of global currencies, sovereign digital currencies and crypto assets will not form a simple "either-or" situation. They are more likely to coexist with different weights in different countries and scenarios: sovereign digital currencies reinforce compliance, efficiency, and national control, while crypto assets continue the spirit of decentralization, openness, and experimentation driven by transnational communities. The game surrounding sovereignty, efficiency, and freedom will unfold over a longer time scale, shaping the boundaries and core of the next generation of the global monetary system.
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