- The People’s Bank of China published a new draft law that seems to prohibit units or individuals from issuing digital tokens.
- This could be the first time the word cryptocurrency has appeared in any of China’s formal laws.
The new draft of legal comments clearly states that no individual or unit can produce or sell tokens to replace CNY in circulation in the market. The violation of this law will have severe consequences according to the draft:
“For anyone that violates such regulation, the PBoC will halt such activities and forfeit any proceed from the making and selling of yuan-backed digital tokens and issue a fine that is up to five times of the involved proceeds
China has recently pushed for a faster launch of the digital yuan with President Xi actually stating that blockchain is one of the top country’s priorities. The revision draft does in fact propose to legalize the digital yuan.
It’s important to note that the new draft states that digital tokens backed by the yuan are the ones affected, it doesn’t mention traditional cryptocurrencies like Bitcoin and others. Nonetheless, China’s ban on crypto trading imposed in 2017 remains in place.
The newly revised draft is also aimed at speeding up the launch of the digital yuan, designed to replace cash in circulation. Commercial banks will be the ones distributing the digital currency to their users, keeping a database that would not be possible with traditional coins and banknotes.