WeChat, the dominant messaging application in China operated by technology giant Tencent, has updated its payments policy to prevent merchants on the platform from engaging in cryptocurrency-related activities.
The messaging giant updated its Payment Service Protocol, indicating that merchants using its service shall not “engage in illegal transactions such as virtual currency,” the issuance of tokens, selling pornography, or online gambling.
The rule change is set to come into effect as of May 31st, 2019 and will potentially impact the Chinese over-the-counter (OTC) market, as WeChat is currently a key channel for OTC transactions.
On May 7th, Dovey Wan, founding partner of crypto investment firm Primitive Ventures, tweeted, “This may impact local liquidity to quite some extent.”
Founder and CEO of major crypto exchange Binance, Changpeng Zhao, who also goes by CZ, replied to Wan’s tweet, speculating that such restrictions might have been imposed on the messaging application firm externally. Nonetheless, he gave an upbeat outlook on the situation, calling it “short term pain, long term gain” that he believes would merely cause a temporary inconvenience and will eventually push the use of crypto in the long term.
CZ also claimed that these types of restrictions actually contribute to the competitiveness of WeChat’s user experience.
Transaction volume via WeChat Pay is reportedly over 1 billion (currency not specified) per day, with the number of users already exceeding a billion according to records from last year. The app is widely used by older citizens in China, with TechNode reporting that 98.5% of Chinese people aged 50-80 hold WeChat accounts.
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