A Chinese lawyer says that the regulatory and legal framework for China’s new digital currency should be improved. Yuan Xiaobin, a member of the national committee of the Chinese People’s Political Consultative Conference (CPPCC) and also chairman of the Zhonghao Law Firm management committee, has stressed the necessity for a complete law to govern the growing ecosystem of Digital renminbi.

Yuan points out that speed, efficiency, security, and traceability are valuable inherent features of the Digital renminbi that can help combat money laundering. However, he emphasizes that there are no explicit legal provisions or standards to regulate its issuance and anti-money laundering measures or set consumer protection rules.

The current currency-related laws and regulations, including the People’s Bank of China Law and the RMB Management Regulations, do not have relevant provisions on digital RMB and its technical standards and specifications, Yuan stated.

Yuan also drew attention to the current legal uncertainty of e-CNY, which, given the relative immaturity of the underlying technology, can lead to the leakage of user property information, and thus called for the speeding up of the revision and improvement of the People’s Bank of China Law, the Anti-Money Laundering Law, and the RMB Management Regulations.

Legal Framework for Crypto Integration

Moreover, Yuan stressed that it was important to lay out the principles of legal compensation and voluntary use of the digital renminbi so as to facilitate its application in stages. He also pointed to the need to clarify the relationship between the e-CNY, cash, and deposit currencies, as well as to establish a free market for exchange between different currency forms and the compatibility between them.

Furthermore, Yuan stressed the need to clearly delineate the rules of lawful compensation and free application for the digital renminbi, for gradual implementation. He also emphasised the need to clarify the relation between the e-CNY, cash and deposit currencies, as well as to establish ‘free market for exchange between different forms of currency, free flow of currency forms, and compatibility between currency forms’.

Yuan also raised another point: we should also pay attention to discovering technological innovations connected with cryptocurrency and make every effort to be prepared to deal with new developments in digital finance. Yuan left open the possibility that blockchain technology in China could have its own varied and playful use cases very soon.