Back in September, just weeks after China's first dramatic currency devaluation, and when Bitcoin was trading at $220, we wrote that "China Scrambles To Enforce Capital Controls" and explained why this is "Great News For Bitcoin." Sadly, China's attempts to boost its capital controls failed as confirmed a few months later by the biggest one-month reserve liquidation in history which took place this past December, while fears about ongoing currency devaluation have led to lines of people rushing to exchange their Yuan into dollars. Oh yes, Bitcoin today is double where it was in September.

So, now that China renewed its currency devaluation over the past 2 weeks with the CNY and CNH both plunging and unleashing the latest round of cross-asset selling across the world, it was only a matter of time before China boosted, or at least tried to, capital controls once again. Which according to Bloomberg it did moments ago:

• CHINA’S SAFE SAID TO ASK BANKS TO LIMIT YUAN OUTFLOWS

Actually, since all Chinese banks are at least partially state-owned, change that "ask" to "order." Here are the details:

China’s foreign-exchange regulator has verbally instructed some banks operating in the mainland to limit yuan outflows and reduce offshore yuan positions and liquidity, according to people with knowledge of the matter.

Banks are asked to better manage net yuan outflows in their capital accounts in the near term, according to the people, who asked not to be identified because the information hasn’t been made public.

Banks are also requested to properly manage cross-border interbank yuan borrowing and corporate offshore yuan lending.

The State Administration of Foreign Exchange didn’t immediately respond to a faxed request for comment after office hours.

This takes place after overnight the PBOC unleashed a "murderous" liquidity squeeze, which sent the deposit rate on the offshore Yuan to 66%, or an overnight widowmaker for anyone who was short the currency.

What happens next? Most likely a rerun of September, when a comparable (failed) attempt to boost capital controls and preserve capital outflow simply lead the public to find more effective ways to evade said capital controls... and also lead to a doubling of bitcoin in 4 months.

Finally, how long before it becomes obvious to everyone that what is going on in among the top echelons of power in China can be summarized with one word: panic.