The Central Bank of China, The People’s Bank of China (BPC) released a bill on Friday that aims to create the legal framework and legitimacy for the central bank’s upcoming digital currency (CDBC), the digital yuan.
The bill says 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-issued, Yuan-backed digital currency efforts. Individuals and institutions are prohibited from producing and issuing a currency that is intended to “replace” the digital circulation of the yuan. This step apparently would criminalize any yuan-sponsored stablecoin that was not approved by the state.
The penalties for violating this law are severe: especially the confiscation of all winnings, the destruction of all tokens and the imposition of a fine at least five times the illegal amount, as well as the possibility of criminal prosecution and imprisonment.
The People’s Bank of China has made that clear The draft of the new law is on the table for public consultation until November 23, 2020.
Earlier news pointed this out China hopes to officially begin issuing the digital yuan before the Beijing Winter Olympics in February 2022. China also conducted a major test of the yuan digital payment system in Shenzhen earlier this month, during which almost 47,500 residents each asked for 200 yuan ($ 30) in digital currency, which they then spent in 3,389 stores across the city.
This regulatory move is also the latest in a global trend towards CDBCs. The Bank for International Settlements told Cointelegraph that it has worked with seven central banks to define the basic principles required for publicly available CDBC to help central banks achieve their policy goals.