One of the largest social media platforms in the world, Chinese-based WeChat, has banned cryptocurrency trading on its platform. According to the company’s updated payment policy, merchants and users who engage in crypto trading will have their accounts terminated from the platform.
No more cryptocurrency transactions on WeChat
WeChat, the largest messaging and social media platform in China operated by Tencent, has quietly updated its payments policy and effectively banned over-the-counter cryptocurrency trading on the platform.
The change to the company’s Payment Service Protocol, implemented on April 30th, stated that merchants using WeChat’s services cannot “either directly or indirectly,” be involved in “any initial coin offering activities or operating virtual currency trading.”
Despite being introduced a week ago, the update gained traction when Dovey Wan, founding partner of crypto investment firm Primitive, tweeted the news on May 7th. Wan noted that the new policy could have an adverse effect on local liquidity, as a large portion of OTC transactions in China happens on WeChat.
Urgh, Wechat just updated its payment policy .. merchant can’t serve any token issuance/fund raising or crypto trading activities, otherwise account will be terminated
Given most OTC transactions are happening in wechat, this may impact local liquidity to quite some extent pic.twitter.com/TdNIO6cggS
— Dovey Wan 🗝 🦖 (@DoveyWan) May 7, 2019
The crypto community was very critical of the update, saying it was another sign of the Chinese government tightening its grip over the crypto market in the country. However, it’s worth noting that the new payment policy only applies to merchants on WeChat Pay, the messaging app’s payments service. While crypto-related activities weren’t labeled “illegal” per se, merchant accounts found of violation of the policy will be terminated.
A small step for WeChat, giant step for crypto
The new policy is in line with WeChat’s practice of banning users that trade digital assets and it follows a state-wide crackdown on all cryptocurrency related activities. Last year, Ant Financial, Alibaba’s payment affiliate, started monitoring and suspending accounts that were suspected of being involved in crypto trading.
And while many WeChat users weren’t happy about the new policy, Changpeng Zhao, the CEO of Binance, saw it as a positive development for the crypto industry. He said that WeChat’s policy update was a “classic example of short term pain, long term gain.”
Zhao explained in a tweet:
“It is inconvenient for people short term, and they take a hit. But long term, it is precisely this type of restriction of freedom that will push people to use crypto. Not a bad thing.”
He also noted that if there weren’t so many restrictions forced upon the company, WeChat would be hard to beat when it comes to facilitating crypto payments.
Honestly, it would be hard to beat WeChat pay if they are relatively open. (The UX is good). But more and more restrictions are forced upon them (probably not their own choice). Go #crypto!
— CZ Binance (@cz_binance) May 7, 2019
We are yet to see if the updated rules, which come into force on May 31st., have any effect on the overall state of the crypto market in China. However, it’s highly unlikely that WeChat will suffer any loss to its 1 billion-strong user base.Posted In: China, Adoption