In another crypto ban, the People’s Bank of China (PBOC) is accepting public comments on a bill designed to pave the way for the digital yuan. China’s ICO for 2017 and the crypto trading ban were making waves in the market at that time. Since then, state authorities have continued to restrict cryptocurrency trading.
Digital yuan tests are already underway, with positive results noted. Several trials have taken place in four cities, namely Suzhou, Shenzhen, Chengdu, and Xionggan, and at the venue for the 2022 Winter Olympics games in Beijing.
The PBOC Creates Severe Penalties for Cryptocurrency Issuers
According to the bill released on October 23, the People’s Bank of China is calling for public comment on its plans to ban cryptocurrency issuance. An excerpt from the document reads that no entity or individual can create or resell symbols, coupons, and digital symbols to replace the Chinese yuan market.
As part of the project, the PBOC defines yuan as physical banknotes and digital currency. With ICOs already banned, it seems that the latest laws could target stable coin issuers or companies producing tokens considered competitors to the yuan.
Besides, the bill carries a fine equal to five times the revenue from the token sale. If accepted, the digital asset issuer must cease operations and lose all profits from selling the crypto.
Chinese crypto reporter Colin Wu tweeted about the matter, saying the news likely marked the first appearance of the cryptocurrency issue in China’s official banking law. The crypto issuance ban is one of many recent changes to the draft document that is likely to replace the 2003 Central Bank Act.
Exploring the Digital Yuan
By banning the issuance and sale of tokens that can compete with digital yuan, the PBOC appears to use its central bank digital currency and give it a growth platform.
As previously reported, the country’s electronic digital currency (DCEP) project is currently undergoing multiple tests in major Chinese cities. In early October, the Shenzhen government issued $ 1.5 million worth of DCEP tokens to 50,000 residents. At the end of September, DCEP allowed $ 160 million in payments from more than 3 million transactions.
Huang Yping, a professor of economics at Beijing University, stated the fundamental difference between digital currency and mobile payment services such as WeChat Pay and Alipay. There is no fee to pay with digital yuan, and without the need for connection to the internet.
In a recent interview with state-sponsored China National Radio, Huang also said the digital yuan would inevitably overlap or even replace existing cellular operators to some extent. China’s national digital currency, known as Electronic Payments with Digital Currency, has been in operation for several years.
Deputy governor of the People’s Bank of China, Fan Yifei confirmed that a total of 3.13 million transactions got carried out in the country’s digital currency before the Shenzhen process.