China’s central bank drafts law on CBDC legitimacy. A proposed law was released on Friday by China’s central bank, the People’s Bank of China (PBOC), which aims to provide a regulatory structure and legitimacy for the digital yuan, the forthcoming central bank digital currency (CBDC).
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 draught law also appears to target third-party efforts on yuan-backed digital currencies. It stated that the formation and issuance of a currency intended to “replace” the circulation of digital yuan is prohibited for individuals and institutions. All non-state-sanctioned yuan-backed stablecoins will likely be criminalised by that move.
The punitive measures against violators of this proposed law are harsh most notably confiscating all profits, destroying all tokens, and imposing a fine of not less than five times the illegal amount created, in addition to the possibility of criminal prosecution and imprisonment. The People’s Bank of China clarified that the draft of the new law is on the table for public consultation until November 23, 2020.