China-Led Digital Currency Platform Sees Rapid Growth in Cross-Border Use

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Transactions on a China-backed cross-border digital currency platform have surged past $55 billion, signaling growing momentum behind efforts to reduce reliance on dollar-based global payment systems, according to a new report.

Analysis by the Atlantic Council shows that the prototype platform, known as mBridge, has now processed more than 4,000 cross-border transactions. The project is being tested by central banks in China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia.

The cumulative transaction value reached $55.5 billion, representing an increase of roughly 2,500 times since the platform’s early testing phase in 2022. The digital yuan accounted for an estimated 95% of total transaction volume, underlining China’s dominant role in the system.

The digital yuan, also known as e-CNY, remains the world’s largest live central bank digital currency experiment. Recent figures from the People’s Bank of China showed the e-CNY has processed more than 3.4 billion transactions worth around 16.7 trillion yuan ($2.4 trillion), an increase of over 800% compared with 2023.

Chinese state media reported last month that holders of the e-CNY will begin earning interest on balances held in digital wallets or bank accounts later this year, a move widely interpreted as an effort to encourage broader adoption.

“Taken together, these developments point to a gradual expansion of the yuan’s internationalization through digital infrastructure,” said Alisha Chhangani, a policy analyst at the Atlantic Council.

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THE RACE IS ON
The rapid progress of mBridge is being closely monitored by policymakers worldwide. The project was originally overseen by the Bank for International Settlements, but the Switzerland-based institution unexpectedly withdrew from the initiative in late 2024.

While not a direct competitor, the BIS has since shifted its focus to a separate cross-border payments project involving seven major central banks, including the Federal Reserve Bank of New York, the European Central Bank (via the Banque de France), the Bank of Japan, Swiss National Bank and Bank of England. That group said this week it is accelerating testing in collaboration with more than 40 large commercial banks.

Despite that, mBridge remains well ahead in terms of real-world usage. In November, the UAE Ministry of Finance and the Dubai Department of Finance completed the first government transaction using a wholesale digital dirham on the platform.

Chhangani said mBridge is likely to increasingly target trade settlements, particularly in energy and commodities, sectors where China already plays a central commercial role. Rather than directly displacing the U.S. dollar, she said, the platform is creating parallel settlement infrastructure that reduces dependence on existing dollar-based systems.

“Project mBridge is unlikely to challenge dollar dominance outright, but it may incrementally erode it,” she said.

The People’s Bank of China did not immediately respond to requests for comment outside business hours.

Taiwan Seeks Strategic AI Partnership With U.S. After Tariff Deal

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Taiwan aims to position itself as a close strategic partner of the United States in artificial intelligence following a trade deal that cuts tariffs and encourages large-scale Taiwanese investment in the U.S., Vice Premier Cheng Li-chiun said on Friday.

Speaking at a press conference in Washington, Cheng said the negotiations promoted two-way high-tech investment and laid the groundwork for deeper cooperation in AI. The talks come as the administration of U.S. President Donald Trump presses major semiconductor producers to expand manufacturing in the United States, particularly for chips that power AI systems.

Cheng led the negotiations that resulted in Thursday’s agreement, which reduces tariffs on many Taiwanese exports and channels new investment into the U.S. technology sector. While the deal strengthens Taiwan–U.S. ties, it risks angering China, which claims democratically governed Taiwan as its territory—claims Taipei firmly rejects.

U.S. Commerce Secretary Howard Lutnick said Taiwanese companies would invest about $250 billion in the United States across semiconductors, energy and AI. That figure includes $100 billion already committed in 2025 by TSMC, the world’s leading producer of advanced AI chips, with additional investment expected. Taiwan will also guarantee another $250 billion in credit to support further projects, according to the Trump administration.

Cheng described the agreement as “win-win,” saying it would also attract more U.S. investment into Taiwan. She stressed that the expansion is company-led rather than government-directed and does not mean abandoning domestic production. “This is not about ‘moving’ but about ‘building,’” she said, calling the U.S. expansion an extension of Taiwan’s technology ecosystem.

Taiwan Economy Minister Kung Ming-hsin said investments would also cover AI servers and energy infrastructure, though companies would disclose chip-related figures themselves. Taiwan’s benchmark stock index closed at a record high on Friday, buoyed by strong TSMC earnings and investor optimism over the deal.

Chang Chien-yi, president of the Taiwan Institute of Economic Research, said the agreement underscores Washington’s view of Taiwan as a key strategic partner in semiconductors, noting it was the first country to receive preferential treatment for chips and related products.

In a statement, TSMC welcomed the prospect of robust U.S.–Taiwan trade ties, reiterating that its investment decisions are driven by market demand. The deal must still be ratified by Taiwan’s parliament, where opposition lawmakers have raised concerns about the risk of hollowing out the island’s critical chip industry.

Lutnick said the objective was to bring 40% of Taiwan’s chip supply chain to the United States, warning that production not built on U.S. soil could face tariffs of up to 100%. Kung said Taiwan estimates that by 2036 the production split for advanced chips would be closer to 80% in Taiwan and 20% in the United States.

Taiwan Vice President Hsiao Bi-khim said the agreement demonstrated Taiwan’s importance in global trade. “Taiwan may not be large in area, but we are agile and innovative—and an indispensable force in the global supply chain,” she said.

California AG Orders Musk’s xAI to Stop Generating Sexual Deepfake Images

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California Attorney General Rob Bonta has sent a cease-and-desist letter to xAI, demanding the immediate halt of the creation and distribution of non-consensual sexual images generated by its AI chatbot Grok.

“I fully expect xAI to immediately comply,” Bonta said in a statement on Friday.

The action follows a growing global backlash against Grok, which has allowed users to create and share sexualized images of women and minors. Authorities in multiple countries have moved to investigate or restrict the tool over concerns about illegal and harmful content.

Bonta’s office said it opened a formal investigation on Wednesday into the creation and spread of non-consensual, sexually explicit material produced using Grok. The probe adds regulatory pressure on xAI, which is owned by billionaire entrepreneur Elon Musk.

xAI said late on Wednesday that it had introduced new restrictions limiting image-editing capabilities for all Grok users, though regulators say concerns remain. The company did not respond to a Reuters request for comment on the cease-and-desist letter.

International scrutiny has intensified in parallel. Authorities in Japan, Canada and Britain have opened probes into Grok, while Malaysia and Indonesia have temporarily blocked access to the chatbot over the generation of explicit images.

California’s move underscores a broader shift by regulators toward holding AI developers accountable for how generative tools are used—and misused—particularly when it comes to non-consensual and sexualized content. The case could set an important precedent for how aggressively governments intervene as generative AI systems become more powerful and widely deployed.