China is a perplexing beast when it comes to their modus operandi, something that’s highlighted in their “anti-crypto” narrative that they’ve been pushing until recently. Suddenly, the country “embraced” blockchain technology through a personal endorsement of their President, and now here we are. The People’s Republic of China has started to limit the amount of cash flow allowed within three of its major provinces.
China: Limiting Cash To Limit Criminal Activity
It’s come to a point where China is playing a charade nobody really bought from the start. The country has cited attempts to curb illegal activities as the reason for limiting cash flow instead of saying what everyone already knows: It’s prepping for crypto. While the way China operates may be strange and sometimes even backward to most of the world, it certainly makes sense to China.
Dovey Wan, the founder of Primitive Capital, gave light to this new event happening in China. She, like many others, consider this to be the first phase in China’s move to push out a digital RMB as soon as possible.
…. OK THIS IS HAPPENING
PBOC announced that it will pilot a regulation on large-amount cash deposit/withdrawal restriction in three provinces across the country
Tighter capital control and cash elimination in action
— Dovey 以德服人 Wan (@DoveyWan) November 14, 2019
The new program to limit funds is considered a “pilot” by the Chinese authorities, set to be in action for two years, at least. The provinces roped into this little expedition are Hebei, Zhejiang, and Shenzhen. Added up, it accounts for around 261,5 million Chinese citizens that will go through this new “cash flow restriction” that is most assuredly not a big move from China to slowly replace its money flow with the digital RMB.
For businesses, any withdrawal above 500 000 CNY needs to be first registered by the relevant authorities. Depending on the province, private accounts will have a differing limit on the number of funds they’re allowed to withdraw. Zheijiang limits to 300 000, Shenzhen limits to 200 000, and Hebei is capped at 100 000.
China is already waist-deep in its cashless payments systems. The country has optimized its cashless systems to the point that it’s become far more trouble to pay with cash than without it. The country proved to be too good at eradicating needless cash flow, causing tourists to suffer as shop owners stopped accepting cash as a means for payment.
China had to release a statement to curb the so-called “overhype” of its cashless system. They cited that rejecting cash payments damages the Yuan’s legal status and hurts the “consumer rights” by denying their preferred method of payment. While it’s an amusing thought, it does bring up the question of what will happen to tourists should they wish to travel in digital yuan-enabled china.
China is now officially the first country to start making large scale moves to enable a nation-wide national cryptocurrency, even if they’re not willing to admit the obvious. The state will slowly limit the amount of “real” cash allowed, before most likely pushing out an RMB version of the Tether coin. The country will eventually just replace RMB with Digital RMB, but that’s, at the very least, a three-year job to completely eradicate all forms of the “traditional” RMB.
The vital distinction is China is already busy with the operations. It’s quite literally ahead of every other country at this point in terms of developing its own cryptocurrency. Something that will make the “anarchists” of the crypto world lose their minds, no doubt.
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Author: Ali Raza