The draft law on Chinese digital currency could punish all Stablecoins linked to the Yuan.
China’s central bank, also known as the People’s Bank of China (PBOC), on Friday presented a draft law to create a legal framework for the digital yuan, its own central bank digital currency (CBDC).
The draft bill first states that the yuan is the official national currency of the People’s Republic of China, whether in physical or digital form.
In this way, the central bank communicates, among other things, the sovereignty over its own currency and therefore puts a stop to crypto-projects by third parties who want to link their digital currencies to the yuan. The aim is to ban both individuals and companies from issuing digital currencies that could „replace“ the yuan. This would automatically make all Stablecoins linked to the Yuan illegal.
The penalties for violating this law are severe. All profits made will be confiscated, all units of the respective digital currency will be destroyed and a fine will also be levied which is five times the value of the original amount in circulation. In addition, there is the threat of criminal prosecution and imprisonment.
The Chinese central bank stresses that the draft is open to public feedback until 23 November.