China Seeks To Restrict Cryptocurrency Production

Andrew Cummings
October 26, 2020

In the draft law published on the website of the Central Bank of China, it was proposed to restrict individuals from generating crypto money, coupons, tokens on their own. 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.

"To prevent risks associated with virtual currency, any other legal entity or individuals can not issue or sell tokens to replace the circulation of Renminbi", stated section 3 article 22 of the document, Coindesk reported. The digital Yuan has progressed into its advanced testing stages and while an official launch date has not been set, the PBoC is doing all it to ensure that the digital yuan gets integrated smoothly without stirring up inflation as it stated back in April.

Any violation of Article 22 shall result in the confiscation of all profits, the destruction of all tokens and the imposition of a fine of less than five times the illegal amount, according to Article 65. If passed, issuers of such digital assets will have to halt their activities and forfeit all earnings from such crypto sales.

This could be the first time the word cryptocurrency has appeared in any of China's formal laws. The crypto issuance ban is one of many recent changes to the draft document that is likely to replace the 2003 Central Bank Act.

China recently ran a pilot project to test the use case, adaptability, and the reach of the Digital Yuan within the country. At the end of September, DCEP allowed $ 160 million in payments from more than 3 million transactions. Now a legal draft proposes a ban on all Digital Yuan-backed altcoins and stable coins in order to ensure proper circulation and adoption. There is no fee to pay with digital yuan, and without the need for connection to the internet.

While this bill has yet to come into effect, people are already wondering how it will affect digital token usage in the country.

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