A proposed Chinese law would ban stablecoins – yuan-pegged tokens – except for the central bank’s digital currency, popularly known as the digital yuan.
The People’s Bank of China (PBoC) aims to provide greater legal clarity to the regulation of its national virtual currency, Coindesk reports.
The central bank is soliciting public comments for the draft of Laws of the People’s Republic of China on PBoC until November 23, according to its statement on Friday.
The proposed law recognizes the renminbi/yuan in both physical and digital form. The new version will also clear the way for the digital yuan to be the one and only official yuan-pegged token in mainland China.
“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.,” says article 22 section 3 in the document.
The revision would take a toll on one of the biggest crypto-related businesses in China because many Chinese investors conduct crypto-to-crypto trading with stablecoins. Tether, one of the largest crypto companies, has a yuan stablecoin.