On October 23, the People’s Bank of China issued a public comment notice on the “People’s Bank of China Law of the People’s Republic of China (Revised Draft for Solicitation of Comments)” to improve RMB management regulations. The “Draft for Comments” stipulates that RMB includes physical and digital forms, and provides a legal basis for the issuance of digital currency; to prevent virtual currency risks, it is clear that any unit or individual is prohibited from making and selling digital tokens to replace RMB in circulation in the market. (Articles 19 and 22)
This news, because of the appearance of terms such as “virtual currency” and “issue currency”, has caused a lot of interpretation. The widely spread view is that the supervisory authorities once again emphasized the IC0 ban and even the 94 upgrade.
In the dissemination of many opinions, the words “to replace RMB in circulation in the market” were ignored, and the previous content in the “Draft for Comments” was overemphasized, and the neglected part is actually the key to interpretation. Rhythm BlockBeats interviewed Harry Zhou, Chief Compliance Officer of Koi OTC. He believes that we should not think too much about the central bank’s actions from Amber, but from the perspective of long-term history and the central bank. Interpreted in one sentence, the two articles in the “Draft for Comments” actually emphasize the sole circulation of the RMB in China.
The following is Rhythm BlockBeats’ finishing of Harry’s views:
Before interpreting this news, we must first understand “the legal status of the renminbi.”
There have been many currencies that have threatened the legal status of the renminbi in history, such as the US dollar, the Hong Kong dollar, and even counterfeit currencies. Before the return of Hong Kong, certain places in Shenzhen could be traded through Hong Kong dollars in the market. Because of these phenomena, the state used three documents with legal benefits to stipulate the legal status of the renminbi. They are the Constitution of the People’s Republic of China, the Banking Law of the People’s Republic of China, and the Regulations on the Management of Renminbi in the People’s Republic of China.
These three documents stipulate the legal status of the renminbi. It is the only legal tender in the country and can pay all public and personal debts. That is, in the country, the renminbi has the only circulation status.
The definition of foreign legal currency status is different from that of domestic ones. Take the United States as an example. The U.S. dollar is the legal tender of the United States, which means that transactions using U.S. dollars cannot be rejected in the United States. For example, A uses U.S. dollars to buy water in a U.S. store, but the owner B says that U.S. dollars is not charged. This behavior is a violation of U.S. law. However, if both A and B both agree to Japanese Yen, and both parties agree to pay for the transaction in Japanese Yen, this behavior is permitted in the United States. Because the legal status of the US dollar cannot be rejected, there is no exclusivity.
The domestic legal status of the renminbi is “the only” and exclusive.
Based on this knowledge, if you look at the Central Bank’s “Draft for Comment”, you will find that this document needs to be supplemented because of the emergence of DCEP.
The first is Article 19. The “Draft for Comments” stipulates that “RMB includes physical and digital forms and provides a legal basis for the issuance of digital currency.” Because of the emergence of DCEP, another form of RMB has emerged, which needs to be supplemented in the law.
And Article 22, “Prevent the risk of virtual currency, and clarify that any unit or individual is prohibited from making and selling digital tokens to replace RMB in circulation in the market.” This content is to continue to emphasize the legal status of the renminbi, that is, the only circulation status. It emphasizes that all transactions in the country, as long as there is a currency circulation scene, can only use the renminbi in physical and digital forms for pricing and settlement.
From the perspective of Amber, this news actually affects USDT, which is showing signs of being out of the circle, and the “RMB stable currency” that is not widely used. For example, using USDT to pay when domestic A buys water from shopkeeper B is illegal. . This is the content expressed in the “Draft for Comments”, emphasizing the legal status of the RMB. IC0 and so on have nothing to do with payment circulation, and this document does not involve other areas.
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