According to Dovey Wan, a founding partner of Primitive Ventures, WeChat will be terminating accounts of those merchants that make payments in virtual currencies. This is just one of the many different restrictive policies to virtual currencies that were implemented in China.
WeChat Updates Payment Policy
WeChat has just updated its payment policy and merchants will not be able to offer their services to token issuance or fundraising crypto trading activities. As Wan explained, the accounts that do not follow these rules are going to be terminated.
This is going to have an impact in the crypto market in China since most OTC transactions take place through WeChat. WeChat is the most popular messaging platform in China and it is also used to pay for goods and services in a similar way to Apple Pay.
As reported by CoinTelegraph, the ban happened due to the changes regarding payment management and measures that were aimed at ensuring the prevention of illegal telecommunications networks and criminal matters. Apparently, the company is trying to be compliant with regulations established by the People’s Bank of China, the central bank of the country.
Changpeng Zhao, the CEO of the Binance crypto exchange, explained that this is just a classic example of short term pain and long term gain. He said that this is inconvenient for people in the short term but these restrictions will push people to use virtual currencies.
About WeChat, he commented:
“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!”
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
WeChat has registered over $1 billion of funds transacted the last quarter of 2018. The number of users on the platform is already $1.098 billion. The country is a very hostile country for digital assets and cryptocurrencies. There are some rumours that the People’s Bank of China could eventually create a virtual currency that would represent the renminbi (RMB).
The Blockchain Research Institute executive chairman, Donald Tapscott, explained that it is not really necessary to ban exchanges in China because in 20 years they are not going to use Bitcoin in China, but instead, people will use the RMB as a cryptocurrency.
Another thing that was worrying crypto investors in China and other countries is the centralization of mining activities in the Asian country and the negative effect a ban could have over the network.
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