China passes cryptography law as gears up for digital currency

China's largely rubber stamp parliament has passed a new law on cryptography as the country gears up to launch its own digital currency, state media reported late on Saturday.

China's central bank set up a research team in 2014 to explore launching its own digital currency to cut the costs of circulating traditional paper money and boost policymakers' control of money supply.

China's proposed new digital currency would bear some similarities to Facebook Inc's Libra coin and would be able to be used across major payment platforms such as WeChat and Alipay, a senior central bank official said last month.

China's cryptography law, which takes effect on Jan. 1, is aimed at "facilitating the development of the cryptography business and ensuring the security of cyberspace and information", the official Xinhua news agency said, citing parliament. The law states that the state encourages and supports the research and application of science and technology in cryptography and ensures confidentiality.

Facebook's proposed cryptocurrency has sparked concerns among global regulators that it could quickly become a dominant form of digital payment and a channel for money laundering given the social network's massive cross-border reach.

Libra will be a digital currency backed by a reserve of real-world assets, including bank deposits and short-term government securities, and held by a network of custodians. Its structure is intended to foster trust and stabilize the price.

Like other cryptocurrencies, Libra transactions will be powered and recorded by a blockchain, which is a shared ledger of transactions maintained by a network of computers.

Chinese President Xi Jinping said last week that the country should accelerate the development of blockchain technology as a core for innovation.