Stifling Facebook’s Libra gives China’s digital currency a huge shot at dominance: RBC analysts

• China has an advantage of distributing its digital current via payment and messaging apps.
• The US needs Libra in order to compete with the imminent China central bank-backed digital currency.

The proposed Facebook cryptocurrency Libra, if supported, could give the United States a competitive advantage over China in emerging markets. The analysts at RBC Capital Markets said that China is expediting the development of its central bank-backed digital currency.

“If US regulators ultimately dismiss Libra and decide not to draft regulation to encourage crypto innovation in the US, China’s CBDC may be strategically positioned to become the de facto global digital currency in emerging economies,” RBC said in a note sent to clients on Tuesday.

According to the analysts, China is better positioned when it comes to the distribution of the digital currency. The central bank could use messaging and payment platforms including Alipay, WeChat, and UnionPay.

“We believe that messaging apps represent the greatest opportunity to onboard consumers to digital wallets which could lead to a greater consumer adoption of digital currencies,” RBC said.

Libra continues to face regulatory bottlenecks amid an exodus of key project backers like eBay, Visa, MasterCard and Stripe. However, the Libra Association now has 21 official members and a board of directors. RBC added:

“If a clear regulatory roadmap is developed and Libra launches successfully, we would not be surprised to see these firms reapply to the association,” RBC said.