The People Bank of China has published a draft law that lays down the foundation for its Digital Currency Electronic Payment (DCEP) to be the one and only digital version of the Chinese Yuan.
According to a report from CGTN, the Chinese Central Bank published a draft version of new banking laws which has included the ‘Digital Yuan’ which effectively lays down the necessary regulatory legal parameters for the DCEP.
A number of reports outline the announcement on Friday, October 23 which essentially provides the legal basis for the national currency to be recognized in physical and digital form. Most importantly, the law intends for the DCEP to be the only official Yuan-backed cryptocurrency token in China.
The draft law also stipulates that the DCEP will be recognized as legal tender which will allow for widespread issuance in China.
“The unit of renminbi is yuan, and the unit of RMB currency is jiao and cent. RMB includes the physical form and the digital form,” Article 19 says.
Outlawing Renminbi stablecoins
The major takeaway is Article 22, which stipulates that no “No unit or individual may produce or sell tokens, coupons and digital tokens to replace RMB in circulation in the market.”
This essentially makes it illegal for any company or person to issue any Yuan-backed stablecoin or token in China. Furthermore the draft law outlines the consequences of breaking these laws which would include the confiscation of profits, destruction of tokens and a fine that will be equally to less that five times the illegal amount issued.
Depending on the severity of infraction – individuals or companies may face criminal prosecution and possible jail time.
Testing has been successful
News of the PBoC’s ongoing testing of the DCEP system continues to grab headlines as there are seemingly new developments every couple of weeks.
The wider Chinese public got their first experience of the pilot CBDC as 50,000 residents in Shenzhen were selected from nearly 2 million people that had signed up to participate in a ‘lottery’ giveaway to trial the ‘Digital Yuan’ earlier this month.
A total of 10 million Yuan was handed out to the 50,000 successful applicants that could then be used to purchase various items at 3,389 selected stores in Luohu district. Over 47,000 participants made use of the 200 Yuan that was handed out through the digital giveaway.