In a surprising move, the People’s Bank of China (PBoC) issued a notice on October 23, signaling serious intent to shift to the digital yuan and ban all Yuan-pegged Stablecoins. The central bank has requested public feedback through emails until November 23 in this review draft, before enacting amendments to the banking law.
Salient Parts Of the Review Draft
This development comes at a time when the People’s Republic of China has accelerated its digital currency roll-out program.
The People's Bank of China has published a new draft law that seems to prohibit units or individuals from issuing digital tokens backed by the Chinese Yuan, with violation to bear severe consequences.
All of this aimed at speeding up the launch of digital Yuan. pic.twitter.com/0gQL5iFK7w
— Bitville (@bitvilleacademy) October 23, 2020
It is also being rumored that eventually the distribution and circulation of “duplicate blockchain Yuans” may be treated as treason. To clear the way for China’s upcoming digital national currency, it has been proposed that any person or group of people engaging in the distribution of Yuan-pegged Stablecoins would be subjected to a penalty, up to 5 times the profit made from the endeavor.
If enacted, the following amendment will be made to the central banking law “Renminbi includes both a physical form and a digital form” confirming without a shadow of a doubt the future form of the People’s Republic of China’s digital yuan. It also mentions that “any individual or entity shall not make or issue any tokenized note or digital tokens that replace the Renminbi’s circulation in the market”, cementing the monopoly of the central bank in issuing and controlling even the blockchain-based digital yuan.
People’s Bank Of China Manner Of Requesting Public Feedback
The mechanism for public feedback has been clearly defined in the draft.
The People’s Bank of China has actively promoted the revision of the “People’s Bank of China Law of the People’s Republic of China” and drafted the law which is now open for public opinion. The public can give feedback through the following channels and methods:
Interested Chinese citizens can express their opinion either through emails to email@example.com or by sending a physical letter to the Articles and Laws Department of the People’s Bank of China, No. 32 Chengfang Street, Xicheng District, Beijing (Postal Code: 100800). Both of the methods should use “Soliciting Comments on the People’s Bank of China Law” as the subject matter.
The proposed revision appears to be paving a legal path for a wider rollout of China’s long-anticipated central bank digital yuan initiative.
In addition, Article 22 under Section 3 in the revision draft also states that “any individual or entity shall not make or issue any tokenized note or digital tokens that replace the Renminbi’s circulation in the market.”
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.
The current edition of China’s central banking law has been effective since 2003, which outlines the role of the PBoC in issuing sovereign fiat currency as well as drafting and executing monetary policies to maintain financial stability.
The proposed revision comes amid the PBoC’s expansion of the trial of China’s digital yuan in major domestic cities. China may be ahead in terms of central bank digital currency (CBDC) development, but other countries and organizations are also creating their own. Line, for one, is building its own custom CBD and is talking with several central banks from various countries.