China law wants to legalise Digital Yuan and ban companies from issuing competing currencies

The Central Bank of China (PBoC) announced on Friday (23) that it is seeking public feedback to review its current legislation. The institution’s proposal is to legalise digital yuan, but to ban the circulation of digital tokens backed by the country’s official currency like Bitcoin Investor.

The revision foresees that the renminbi will take on the format „both physical and digital“, which may pave the legal way for the long-awaited implementation of China’s digital currency, as the website The Block notes.

It is worth mentioning that the Renminbi is the official name of the currency circulating in China, while yuan is its unit of measurement.

Recently, the PBoC has been testing its digital currency/electronic payment (DCEP) in some Chinese cities. When it is in full operation, it may become the first digital currency in the world to be issued by a Central Bank. In comparison, it is as if Brazil is launching a ‚digital real‘ in digital currency format.

In addition to the proposed legalisation of digital yuan, the draft revision of the law suggests that no citizen or company may issue tokenised banknotes or digital tokens to replace the circulation of renminbi in the market.

„Anyone who violates such regulations will have their activities interrupted and any revenues from digital tokens blocked,“ the proposal states. Violators will also have to pay a fine of up to five times the amount involved in illegal operations.

The current version of the law governing the PBoC has been in force since 2003. The text determines the bank’s role in issuing sovereign currency as well as in designing and implementing monetary policies to maintain the country’s financial stability.

Chinese citizens will have until 23 November to send feedback on the bank’s proposed changes.