Coinbase became the first cryptocurrency exchange to list in New York this month, gaining a valuation more than that of the company behind the Nasdaq exchange it listed on. While fans of bitcoin or other cryptocurrencies such as ethereum ride the roller coaster of Coinbase’s stock price, others are urging prudence and drawing a distinction between the market reaction and what the People’s Bank of China is doing with its experimental e-currency, the digital yuan. Cryptocurrencies and the e-yuan are fundamentally different. Bitcoin is the largest cryptocurrency, born out of decentralisation and the goal of bypassing a monetary authority such as a central bank. The digital yuan is a digitalised form of fiat money issued by the central bank. While US officials say they are monitoring the digital yuan closely, what happens on the Nasdaq bears watching. The digital yuan is to cryptocurrencies what Chinese state-owned enterprises are to American private companies. It will be another critical front in the contest between state capitalism and free-market capitalism. The e-yuan, called the Central Bank Digital Currency or CBDC, will be backed by the full authority of the central bank and government. By contrast, so far lightly regulated cryptocurrencies exist and maintain their value only by the faith of their users and investors. After its direct listing, nine-year-old Coinbase is worth about US$64 billion. Its primary trading product is bitcoin, followed by ethereum. Before regulators move in, cryptocurrencies and their exchanges are perhaps the purest form of free-market capitalism – like the “Wild West” of the early internet days. That accounts for extreme volatilities in value. The CBDC is designed to function like a currency, especially among the world’s largest population of smartphone-carrying consumers in its home market. China, Hong Kong begin testing digital yuan as Beijing explores cross-border use The central bank had treated its roll-out – meant for domestic circulation, not so much for cross-border payments, according to former governor Zhou Xiaochuan – with an abundance of caution, designating the cities of Shenzhen, Chengdu, Suzhou and Xiongan for pilot schemes before introducing it in more cities, said Li Bo, vice-governor of the People’s Bank of China, at the Boao Forum in Hainan on Sunday. That prudence may guarantee the digital yuan’s longevity.