Chinese social media giant and payment service provider WeChat banned cryptocurrency transactions in its payments policy. Dovey Wan, founding partner of crypto investment firm Primitive, tweeted the news on May 7.
The tweet contained a screenshot of the policy changes, which intimates that users who engage in cryptocurrency trading will have their accounts terminated.
Wan expressed concern that since most over-the-counter transactions are happening in WeChat, “this may impact local liquidity to quite some extent.” WeChat is a popular messaging and payments service provider in China, also featuring game integrations.
The updated rules — coming into force on May 31 — state that “merchants may not engage in illegal transactions such as virtual currency," the issuance of tokens, selling pornography or online gambling.
Changpeng Zhao, founder and CEO of major cryptocurrency exchange Binance, commented that he believes the restrictions have been forced on the company. Furthermore, Zhao also defined the developments “a classic example of short term pain, long term gain.” He explained:
“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.”
Lastly, he noted that it would be hard to beat the user experience offered by the WeChat payment services if it wasn’t for such restrictions.
WeChat Pay reportedly registered a total daily transaction volume of over 1 billion (currency unspecified), while the overall number of users allegedly reached 1.098 billion by the end of last year. According to technology news outlet TechNode, the app is also popular among older people, with 98.5% of Chinese people aged between 50 and 80 WeChat users.
At the end of January, news broke that major WeChat Pay competitor Alipay and WeChat Pay reportedly requested that crypto exchange Huobi remove their payment services from its over-the-counter trading desk.