- The restriction pilot for these transactions will last for about two years.
- The goal of the launch of the RMB token is to complement the current fiat currency, rather than compete against it.
The People’s Bank of China (PBoC) has had a lot of attention lately with their many changes in the crypto industry. Now, it looks like the central bank is looking to combat money-related criminal activities with a new restriction. The restriction, which will first be piloted for two years, will restrict large-scale cash transactions for three specific regions within the country – the Hebei Province, Zhejiang Province, and Shenzhen City. One expert believes that this decision is meant to help with the launch of the Renminbi token (RMB), which has yet to be released.
As the PBoC sees it, the use of large cash transactions creates an ideal opportunity for criminals to engage in illegal activities, like tax evasion, money laundering, and corruption. Business accounts will be restricted from exceeding 500,000 yuan ($71,000) in their large-amount cash deposits/withdrawals, while persona accounts will have restrictions from 100,000 yuan ($14,000) to 300,000 ($43,000). However, the restrictions on personal accounts will depend on the province in which the customer is located.
Specific industry sectors will also see their large-value cash transactions restricted by the PBoC, like the real estate industry in Xingtai City. Other industries that should expect to see more control by the PBoC include Qinhuangdao City’s medical industry records and Zhejiang Province’s automobile sales industry and large-scale cash withdrawals. The staff of PBoC stated,
“Under the requirements of large-scale cash management, banks need to deepen their understanding of current customers, strengthen risk warning information communication for customers who are prone to generate large cash transactions, and guide them to use non-cash payment tools.”
Based on the new restriction pilot, Primitive Ventures founding partner Dovey Wan believes that this plan will be creating the ideal environment for the Renminbi token.
…. 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
Detail below 👇
— Dovey 以德服人 Wan 🗝 🦖 (@DoveyWan) November 14, 2019
There has yet to be any official details released about the RMB token, but it is clear that the creators don’t plan for it to be as decentralized as Bitcoin has been, since a central bank is issuing it. Changpeng Zhao, the CEO of Binance, stated at the BlockShow Asia 2019 that be thinks the digital RMB will end up being based on blockchain tech. Zhao added,
“The Chinese government wants to push RMB’s influence globally. They want RMB to be competitive with the US dollar. In order to do that, they really need to push this currency to have more freedom.”
Though there are many rumors about what these changes may be caused by, a senior official with PBoC recently stated that there is no war on cash with the new digital currency from PBoC. The head of the digital research institute at the PBoC, Mu Changchun, reiterated this sentiment, adding that the digital asset is meant to complement, rather than compete with, the paper yuan.