China could launch its own digital currency within the next 6 to 12 months, in what could become a challenge to the U.S. dollar's global dominance, according to fund manager Edith Yeung.
The Chinese government has been researching and studying the possibility of launching its own digital currency in recent years and has identified entities for a potential roll-out, said Yeung, a partner at blockchain-focused venture capital fund, Proof of Capital.
"It's really been something (that's) been in the works for the last few years," she told CNBC's Arjun Kharpal and Christine Tan at the CNBC's East Tech West conference in the Nansha district of Guangzhou in China on Wednesday.
Asked how soon a virtual yuan could become a reality, she said it could be "quite soon."
"So I think definitely within the next six to 12 months," said Yeung.
China recently threw its weight behind blockchain — the technology that underpins cryptocurrencies such as Bitcoin. State media reported that President Xi Jinping said China should look to take a lead in the technology.
Also at the East Tech West conference on Tuesday, Wendy Liu, head of China strategy for UBS told CNBC there was greater willingness in China than elsewhere to back blockchain and 5G technologies. That's because they are key to facilitate and manage commerce in the world's most populous country, she said.
"Due to its own needs, (China) is going to push in that direction and you see this willingness to back these technologies more so than anywhere else," said Liu.
According to some experts, China is outspending the U.S. in its development of 5G — the next generation mobile services which promises super-fast data speeds that can support driverless cars.
Tensions between the U.S. and China have reached fever-pitch in recent months. The world's two largest economies have been fighting over trade and technology in what some say is a power struggle for global leadership.
While the U.S. dollar remains the "prime" global currency, Yeung said the wider use of the Chinese yuan could "challenge the U.S."
"I think the Chinese government is being really smart about driving the adoption of RMB," Yeung said, referring to the renminbi, another name for the Chinese yuan. "Can you imagine, especially for the One Belt One Road initiative, they (start) to lend all in virtual RMB? Many of these countries will want to work with China to start adopting virtual RMB."
The One Belt One Road initiative is Chinese President Xi Jinping's signature infrastructure project to connect more than 60 countries in Asia, Europe, Africa and the Middle East.
"I really think that the United States needs to hurry up to have a strong thinking and policy, at least a direction for virtual USD."
In June, social media giant Facebook unveiled its plan for its digital currency project Libra. But those plans have been under fire amid privacy concerns and its impact on the global financial system.
For her part, Yeung said the Libra project has inspired other countries to think about the potential for their own virtual money.
"I think what (has) been done on the Libra side of things, instead of driving adoption for Libra, it is actually driving the whole world, central banks to really need to get into the game for digital currency," she said.
— Arjun Kharpal contributed to this story.