China’s big two digital payment platforms Alipay and WeChat Pay have issued separate statements on Thursday making explicit their policies forbidding transactions related to cryptocurrency trading.
Why it matters: The move follows several media reports suggesting that cryptocurrency exchange Binance has started accepting fiat currencies via Ant Financial’s Alipay and Tencent’s WeChat Pay.
- Malta-based Binance, considered one of the largest cryptocurrency exchanges in the world, announced on Wednesday a new peer-to-peer (P2P) trading function that allows Chinese users to trade cryptocurrencies against the Chinese yuan.
- P2P trading circumvents Chinese laws banning cryptocurrency exchanges, allowing traders to instead settle transactions directly with one another.
“To reiterate, Alipay closely monitors over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations. If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services.”
—Alipay on Twitter
Details: Binance announced the new P2P trading function on Wednesday. However, amid the excitement, there was also confusion regarding the incorporation of Alipay and WeChat Pay as payment methods.
- On Wednesday, Binance founder and CEO Zhao Changpeng, known as CZ, confirmed that investors in China can now purchase cryptocurrencies like Bitcoin using popular payment methods like Alipay and WeChat Pay via Binance. Later, CZ clarified that while users can use Alipay and WeChat Pay in P2P transactions for payment, Binance is not working directly with the two providers.
- Alipay issued a statement on multiple social media platforms in Chinese and English to reiterate its anti-crypto stance on Thursday.
- Shortly after, WeChat Pay also put out a similar notice (in Chinese) to clarify that transactions related to cryptocurrencies will be stopped immediately, adding that users are welcome to report offenses and suspicious activities.
Context: The P2P trading feature is Binance’s attempt to re-enter China, its home market, where cryptocurrency exchanges are illegal. The response from China’s largest mobile payment platforms conforms with Chinese laws banning cryptocurrency trading. This is not the first time WeChat and Alipay have gone after cryptocurrency and exchange services.
- Earlier this year, WeChat Pay and Alipay reportedly requested cryptocurrency exchange Huobi to remove their payment methods from its over-the-counter trading desk.
- In May, WeChat updated its payment policy, restricting merchants from participating in illegal transaction activities including crypto trading and token fundraising.
- According to CZ, the Chinese market is the first market to see this P2P trading service. The company expects to roll it out in other regions soon.
- The company was among the many exchange services ousted by China in 2017 amid a crackdown on crypto assets.