The Chinese central bank, the People’s Bank of China (PBOC), released a bill on Friday aimed at providing regulation and legitimacy for the central bank’s future digital currency (CBDC), the digital yuan.
The draft law 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 efforts against RMB-backed digital currencies, as individuals and institutions are prohibited from creating and issuing currencies designed to “replace” the circulation of RMB digital. The move will likely criminalize all RMB-backed coins that have not been sanctioned by the state.
Punishments against violators of this proposed law are harsh, including confiscation of all profits, destroying all tokens, imposing a fine of not less than five times the illegal amount, in addition to the possibility of prosecution and imprisonment.
The People’s Bank of China confirmed that the new draft law is under public consideration until November 23, 2020.
Previous reports indicated that China hoped to officially launch a digital version of the yuan ahead of the Beijing Winter Olympics in February 2022. In addition, earlier this month, China conducted a major test of the digital yuan system in Shenzhen, with some 47,500 residents demanding With 200 yuan ($ 30) in digital currency, which they then used in 3,389 stores across the city.
This regulatory step is also the latest in the global trend towards CBDC. The Bank for International Settlements told Cointelegraph that it has worked with seven central banks to define the basic principles needed for all publicly available central bank currencies to help central banks achieve government policy goals.