The new bill legitimises digital yuan and may criminalise the issuance of yuan-backed stablecoins by third parties.
China’s Central Bank launches regulatory framework for CBDCNOTICS
China’s central bank, the People’s Bank of China (PBOC), published a bill on Friday aimed at providing a regulatory framework and legitimacy for a future central bank digital currency (CBDC), the digital yuan.
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The bill states that the yuan is the official currency of the People’s Republic of China, whether in physical or digital form.
The bill also appears to target third-party initiatives on digital coins supported by yuan, stating that individuals and institutions are prohibited from making and issuing a currency intended to „replace“ the digital circulation of yuan. Such a measure would probably criminalise all stablecoins not sanctioned by the state and backed by the yuan.
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The punitive measures against the violators of this proposed law are harsh: mainly confiscate all profits, destroy all tokens and impose a fine of no less than five times the illegal value created, in addition to the possibility of criminal prosecution and imprisonment.
The People’s Bank of China has clarified that the draft new law is open for public consultation until 23 November 2020.
Earlier news indicated that China hopes to officially start broadcasting the digital yuan before the Beijing Winter Olympics in February 2022. In addition, earlier this month, China conducted a major test of Shenzhen’s yuan digital payment system, where nearly 47,500 residents claimed 200 yuan (US$30) each in digital currency, which they spent in 3,389 shops across the city.
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This regulatory movement is also only the latest in a worldwide trend towards CBDCs. The Bank for International Settlements told the Cointelegraph that it had worked with seven central banks to define the basic principles necessary for any publicly available CBD to help central banks meet their public policy objectives.