Paying the Price: WeChat Merchants Banned From Crypto Payments

Paying the Price: WeChat Merchants Banned From Crypto Payments

On May 7, Dovey Wan, founding partner of crypto investment firm Primitive Ventures tweeted that the Chinese social media behemoth and payment service provider WeChat is set to ban merchants from making cryptocurrency payments. This ban marks the latest effort to stymie cryptocurrency usage in China, with the government also mulling over ways of greatly decreasing the presence of crypto mining on its soil.

WeChat bans crypto payments

A rough translation of the Payment Service Protocol found on weixin.qq.com indicates that the ban is a result of changes regarding payment management and measures to ensure the prevention of illegal telecommunications networks and criminal matters, brought about by the Peoples Bank of China.

Although the screenshot tweeted by Wan does not explicitly label cryptocurrency transactions as illegal, the text states that users who engage in crypto trading will have their accounts terminated. As per the screenshot, merchants may not engage in illegal transactions such as virtual currency, along with other restrictions not related to fintech.

As most over-the-counter (OTC) trades conducted in China take place via WeChat, Wan predicted that the ban may impact local liquidity to quite some extent.

Changpeng Zhao (aka CZ), CEO and founder of the cryptocurrency exchange Binance, said that, although he believes the restrictions were imposed on the company externally, there is still room for optimism. CZ wrote that this will not, in his view, have a negative effect in the long term.

This is a classic example of short term pain, long term gain.

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.

— CZ Binance (@cz_binance) May 7, 2019

CZ also said that the WeChat user experience was positive overall and would be hard to beat if the company took on a more transparent approach.

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, 201 ...

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Tags: Cryptocurrency, People's Republic of China, WeChat, Renminbi, National Development and Reform Commission, ban, Merchant, Payment, Changpeng Zhao, Blockchain Research Institute