WeChat, the Chinese largest social media and messaging platform operated by Tencent, has updated its service terms. Starting from May 31 it is forbidden to perform cryptocurrency trading there.
WeChat, the Chinese alternative to WhatsApp, has changed its payments policy imposing ban for merchants engaged in cryptocurrency activities. Otherwise, their accounts will be terminated.
The changes in the protocol of WeChat were implemented on April 30. According to the information provided, merchants shall not “either directly or indirectly be involved in any initial coin offering activities or operating virtual currency trading”.
In respond to that fact, on May 7th Dovey Wan, founding partner of crypto investment firm Primitive, underlined in Twitter that it can influence company’s local liquidity, seeing that most OTC transactions are taking place on WeChat platform.
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 "Rug the fiat" Wan (hiring) (@DoveyWan) May 7, 2019
However, it should be mentioned that the new policy will be applied to users who registered as a merchant or a corporate user in contradiction from retail individuals. Moreover, this new policy does not consider cryptocurrency activities as illegal.
People engaged in crypto activities reacted critically on the changes. They say it is a new step of the Chinese government to tighten the policy towards crypto community. It’s worth mentioning that China has a long-term plan to escape from decentralized currencies. Back in 2017 they already put a ban on Initial Coin Offerings (ICOs) and exchanges, later also on mining industry.
Positive Reactions
CEO of Binance, Changpeng Zhao, expressed his point of view in reaction to the post of Wan in Twitter. He is sure that this new restriction was imposed on the company. He also positively noticed that new changes in protocol can stimulate people to use WeChat Pay more.
“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.”
In conclusion, he underlined:
“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!”
To sum it all up, it is barely possible for the WeChat with the 1 billion user base to suffer any losses from these new regulations. However, the situation will become clear after applying them in action on May 31.
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