Yet again, China has made it clear to the world that the central bank’s digital currency has been winning in its development and issuance. China seems to be well ahead of the CBDC game, though being first in the game has its own perks. The Asian country’s latest news revealed that progress has been made in the digital yuan regulatory sector.
Digital Yuan, Not Yuan-Pegged Tokens
A recent notice issued by the People’s Bank of China, the central bank of the world’s most populous country affirmed that the bank and the government were inclined towards regulating the digital yuan and banning yuan-pegged digital assets. Through the notice, the Chinese central bank sought feedback from the public to make amends to the existing central banking law. The bank urged people to send in their feedback for the alteration of the draft before 23 November 2020.
China’s CBDC development turned several heads. With some lauding the country’s pace in the development of the digital yuan, a few others alerted the Chinese citizens that this asset would take away financial privacy. However, the country seems to be emphasizing outlawing yuan-pegged assets.
The law put forth with regard to digital assets suggests that the Renminbi encompassed both a physical as well as a digital form. Section 3 under article 22 in the revision draft proposed that any legal entity or an individual was prohibited to sell or issue tokens that impacted or replaced the circulation of the Renminbi. The revised draft further read,
“For anyone that violates such regulation, the PBoC will halt such activities and forfeit any proceed from the making and selling of yuan-backed digital tokens and issue a fine that is up to five times of the involved proceeds.”
The latest news proves that digital yuan would soon be a part of the global financial scene. However, the fact that the country is steering towards outlawing yuan-pegged stablecoins could be a major drawback for the several platforms that the country currently harbors.