WeChat Releases New Payment Service Policy, Banning Crypto Trading And Transactions
New Payment Policy Released By WeChat, Banning Crypto Transactions
- Merchants and corporate users can no longer be engaged in crypto activities with WeChat, starting May 31st.
- Binance CEO suggests that WeChat’s policy change was not of their own volition.
The WeChat messaging application is a prominent service in China, which is run by a larger company called Tencent. The service allows consumers to submit payments through the service as well, but the company has decided to make some changes to the payments policy that could put a kink in the activities of some users. According to The Block, an amendment has been added that will keep users from engaging in crypto trading.
As of April 30th, the company’s new Payment Service Protocol says that the merchants on the services are not allowed to participate in “any initial coin offering activities or operating virtual currency trading.” This policy essentially prevents the merchants from being involved “either directly or indirectly,” and will be in effect on May 31st.
When the policy is officially implemented, any merchants that are found engaging in the aforementioned activities will be terminated from using WeChat’s payment services. Still, despite being spun differently by the news media outlets in China, the update did not call the activities “illegal.”
The traders that will most likely see a significant impact are the ones involved with over-the-counter trading that already use the WeChat Pay as a way to transact Chinese yuan. Both Huobi and OKEx are exchanges that allow for OTC market makers to work on their platforms, along with offering their platforms to individual users, with exchanging fiat to crypto.
The WeChat Pay policy specifically addresses merchants, rather than retail individuals. These users are specified as merchant users or corporate users, and it follows the same pattern that the company has continually had to use the platform for crypto-related transactions.
China’s regulations on cryptocurrency have been relatively strict, especially since 2017 when the use of initial coin offerings was completely banned. Due to the regulations, The Block theorized that WeChat may have been a victim of governmental pressure to follow along, adding Binance CEO Changpeng Zhao’s comments that their policy change was likely not their choice.
Along with WeChat, their affiliate Ant Financial has also worked to watch user accounts that are believed to be involved in crypto trading, suspending the accounts that violate their policies. WeChat has remained the dominant platform for these types of transactions, which means that the newly imposed policy will likely have an effect on the liquidity pool in the country, according to Dovey Wan of Primitive Ventures.
The ban from WeChat Pay comes four months after Huobi received a request to remove the payment services from their own OTC trading desk.