The introduction of the PBOC digital currency is aimed at asserting state control of cryptocurrency circulation, according to the official. It will comply with China’s regulations on fraud and money laundering, and will be based on a “two-tier” system, with the central bank partnering up with some other Chinese financial institutions to oversee its supply.

Mu also noted that the digital currency would not solely be based on blockchain technology, citing fears that it might not be able to process the transaction volume necessary for China.

The PBOC stated earlier in August that it plans to “expedite the research of China’s legal digital tender” and monitor the trends of virtual currency development both abroad and at home. The Chinese central bank reportedly sped up the development of its digital currency after Facebook announced plans to launch a global digital coin, Libra.

Facebook’s digital coin has been widely criticized since it was announced, with authorities in the UK, the US, and Russia expressing concern that Libra could create risks for the global financial system due to uncontrolled capital flows.

China was one of the first countries to impose restrictions on cryptocurrencies. Back in 2013, financial institutions were banned from transactions with them. In 2014, banks and payment systems had to stop servicing accounts for trading in cryptocurrency. In 2017 the government ordered all local crypto exchanges to stop their operations. Initial coin offerings, or ICOs, were also banned. Following this, almost 100 cryptocurrency exchanges were closed.

China won’t be the first nation to launch a cryptocurrency. Last year, Venezuela launched Petro, aiming to get around US sanctions. However, Petro coins have not entered into wider circulation to date.