Chinese cities are starting to support digital yuan through festive lotteries.

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The city of Shenzhen has launched the third round of its central bank digital currency pilot in the form of a promotional lottery scheme offering residents handouts during local festivities.

Residents of the Longhua District in the Chinese city of Shenzhen will have a chance to participate in a forthcoming lottery event that aims to encourage the adoption of the country’s new central bank digital currency — known alternatively as the DC/EP, digital renminbi, or digital yuan.

Announced on Jan. 20, the lottery is scheduled for Jan. 26, when lots will be drawn to select the 100,000 winners who will each receive a festive “red envelope” packet containing 200 yuan ($31) in DC/EP. The total currency issued and distributed for the event will therefore amount to 20 million yuan ($3.1 million) in value.

Two stipulations have been set for those residents who wish to take part in the lottery: they must have purchased social insurance from the commercial entities they work for and have definite plans to stay in the city during the forthcoming Lunar New Year holiday, also known as the Spring Festival.

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These conditions limiting the lottery to employees at participant commercial entities make this round slightly different to the two prior “red envelope” promotional lottery schemes that were held in two other districts in Shenzhen city: in the Luoho District in Oct. 2020 and the Futian District in Jan. 2021.

As with the prior schemes, the gifted currency will be expendable at selected merchants who have already signed up for the digital yuan system — 35,000 merchants in total — during a week-long period between Feb. 1 and 9. Winning participants will not be able to transfer their red envelope to a third-party.

In the announcement for the scheme, local media presents the event as a part of ongoing pilots of the new currency, as a means to promote its adoption, and as a way of encouraging Shenzhen employees to stay in town for the Lunar New Year festival as part of measures for controlling the COVID-19 epidemic.

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As reported, earlier lottery pilots were deemed successful, with the vast majority of participants successfully receiving and spending their digital currency red envelopes. Following a slightly differently configured pilot scheme that was held in the city of Suzhou last year, e-commerce merchants similarly reported a significant volume of transactions using the digital yuan.

Last week, the state-owned Agricultural Bank of China launched the first digital yuan ATMs in the country with the aim of guiding citizens in converting to and from the digital currency.

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