Joe Lubin: China Will Avoid Blockchain's 'Decentralizing Aspects'

China's forthcoming digital renminbi is unlikely to use blockchain, considers Ethereum co-founder and ConsenSys CEO Joe Lubin.

In an interview for CNBC's Squawk Box Asia on Nov. 6, Lubin argued that the People's Bank of China has little to gain - for its purposes - from the decentralized aspects of the technology.

"There's no real reason" for China to make use of decentralization.

As reported, China's digital legal tender - or central bank digital currency - will be controlled by the PBoC and officials have said they expect the asset to "Have lots of positive impacts, including tracking the money flow in economic activities and supporting making monetary policy."

"China is probably not interested in that aspect of blockchain. They will, I believe, bring a digital RMB to China that makes use of some of the cryptographic primitives of blockchain technology but there's no real reason for China to make use of its decentralizing aspects."

Lubin noted that should the system be designed to be operated by multiple actors, not just the central bank, it's possible there would be advantages for its creators to implement the " fuller aspects of blockchain.

"It's probably just about the digital, not the decentralized aspect," he said.

This summer, Yang Dong - director of the Research Center of Finance Technology and Cyber Security at Renmin University of China - told reporters at the CPC-owned English-language news portal China Daily that the CBDC was being tested for non-governmental and cross-border applications.

PBoC Deputy Director Mu Changchun revealed in August that the CBDC will be structured as a centralized, two-tier system, with the PBoC at the top tier and the second tier controlled by domestic commercial banks.

Late last month, the vice-chairman of Chinese economics think tank, the China Center for International Economic Exchanges, said he was confident the PBoC would win the global race to become the first central bank to launch a CBDC. The Standing Committee of the 13th National People's Congress in China passed a new law regulating cryptography on Oct. 26 due to take effect on Jan. 1, 2020.