In yet another crypto-related ban, China’s central bank is accepting public comments concerning a draft law that seeks to pave the way for the digital yuan.
China’s 2017 ICO and crypto trading ban sent shockwaves across the market at the time. Since then, authorities in the country continue to place restrictions on cryptocurrency commerce.
PBOC Mulls Stiff Punishment for Cryptocurrency Issuers
According to a draft law published on Oct. 23, the People’s Bank of China (PBOC) is calling for public comments on its plan to prohibit cryptocurrency issuance.
An excerpt from the document reads:
“No unit or individual is allowed to create or resell tokens, coupons, and digital tokens to replace the circulation of Chinese yuan in the market.”
As part of the draft, the PBOC defined the yuan as being both physical currency notes and its digital counterpart. With ICOs already banned, it appears the latest law may target stablecoin issuers or entities that create tokens seen as competitors of the yuan.
Furthermore, the draft law also prescribes a fine in the amount of five times the proceeds earned from the sale of such tokens. If passed, issuers of such digital assets will have to halt their activities and forfeit all earnings from such crypto sales.
Tweeting on the matter, Chinese crypto reporter Colin Wu revealed that the news probably marks the first appearance of crypto-related issues in China’s formal banking laws. The crypto issuance ban is one of many new amendments in the draft document which will likely replace the 2003 central banking law.
This may be the first time that cryptocurrency has appeared in China's formal laws.
— Colin Wu（WuBlockchain） (@WuBlockchain) October 23, 2020
By prohibiting the issuance and sale of tokens that could compete with the digital yuan, it appears the PBOC is gearing up for the release of its central bank digital currency.
As previously reported by BeInCrypto, the country’s digital currency electronic project (DCEP) is currently undergoing multiple trials across major Chinese cities.
Earlier in October, the Shenzhen government airdropped $1.5 million worth of DCEP tokens to 50,000 residents. As of the end of September, the DCEP had reportedly facilitated $160 million in payments from more than 3 million transactions.
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