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Bitcoin soars as China’s curbing capital outflow

China’s authority announced two measures on the last two days of 2016 in an attempt to curb capital outflow. Meanwhile Bitcoin soars to around 7,400 RMB, 600 yuan away from its record high of 8,000 yuan in 2013.

On 30th December, PBOC announced that banks were required to report all yuan-denominated cash transactions exceeding 50,000 yuan ($7,200) to the People’s Bank of China (PBOC). Prior to the change, the threshold was 200,000 yuan. The measure will be effective starting in July 2017. Insurance agencies, insurance brokers, consumer finance companies and loan companies, which are not required to report large and suspicious transactions, are also included in the scope of management. They are required to submit large transactions and suspicious transactions to comply with anti-money laundering obligations.
The second day, China’s State Administration of Foreign Exchange (SAFE) announced  a new measure, which requires Chinese residents to fill in an application form before buying foreign exchange, indicating the purpose of foreign exchange purchases and how and when they plan to use it.
The timing of second release is quite awkward as the last calendar day of 2016 is not a working day in China.
These two measures are generally regarded as the latest measures of China authority to curb the shrinking of foreign exchange reserve of a little over 3 trillion USD.
The first measure will add extra work to the financial institutions but the second one is sure to impact every Chinese resident. They now need to fill an application form and be careful with the use of them.
As per the warning message of “Personal purchase of foreign exchange application form”, individuals who are found breaching the six rules will be included in the “list of concerns” by foreign exchange authorities. They are no longer eligible for purchasing foreign exchange this year and the next, thus saving 100,000 USD quota.
The six violations include:

False declaration of personal info on purchasing foreign exchange;
Providing false supporting evidence;
Lending one’s own quota to help others purchase foreign exchange;
Borrowing other people’s quota to buy foreign exchange purchase;
Investing in overseas securities, the purchase of life insurance and other investment return bonus insurance and other capital projects that are not yet open;
Participating in money laundering, tax evasion, underground banking transactions and other illegal activities.

Sina news, with 8.4 million followers on weibo, claimed that the age of 22-year free flow of capital had ended.
The combined effect of these two measures will “make it more difficult” for Chinese to transfer foreign currency out of China. For example, if one wants to pay 50,000 USD without triggering the alarm, he must split the transaction into 7 times in 7 days (daily limit of 50,000 yuan or 7,102 USD).
The other tool that allows frictionless transfer of value, Bitcoin, has become an alternative option for people who wants to transfer money out of China.

However, the rapid climb of bitcoin price also raises concerns among the ecosystem. People are worried that the Bitcoin may face another blow from the authority like it had been 3 years ago. The constant mention of bicoin on mainstream media will draw money and attention to the cryptocurrency.

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CCTV mention Bitcoin’s 3-year record high on 3rd Jan 2017

 

 

COMMENTS(7)

  • hl5460
    5 months ago hl5460

    China’s authority announced two measures on the last two days of 2016 in an attempt to curb capital outflow. Meanwhile Bitcoin soars to around 7,400 RMB, 600 yuan away from its record high of 8,000 yuan in 2013.On 30th December, PBOC announced that banks were required to report all yuan-denominated cash transactions exceeding 50,000 yuan ($7,200) to the People’s Bank of China (PBOC). Prior to the change, the threshold was 200,000 yuan. The measure will be effective starting in July 2017. Insurance agencies, insurance brokers, consumer finance companies and loan companies, which are not required to report large and suspicious transactions, are also included in the scope of management. They are required to submit large transactions and suspicious transactions to comply with anti-money laundering obligations.http://news.8btc.com/bitcoin-soars-as-chinas-curbing-capital-outflow

  • agentf90
    5 months ago agentf90

    CHINA BAN BITCOIN

    • captchu
      5 months ago captchu

      No, they just make it more difficult to exchange USD.

      • agentf90
        5 months ago agentf90

        BITCOIN BAN CHINA

        • captchu
          5 months ago captchu

          Very poetic.

          • agentf90
            5 months ago agentf90

            CHINA BAN BITCOIN POETRY

  • 23781946
    5 months ago 23781946

    That’s true. Poor Chinese.

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