As the Chinese clampdown of cryptocurrencies has increased over past week, Alipay the largest payment application in China has come forward and has officially banned over-the-counter (OTC) Bitcoin trading, prohibiting traders from utilizing Alipay accounts to initiate digital asset trades.
Alipay crumbles under regulatory pressure
Ant Financial, a subsidiary of Alibaba, is the parent company of Alipay. Its valuation increased to $150 billion earlier 2018, after securing a massive $10 billion funding round. Alipay has dominated the Chinese payment market, garnering 90 percent of the market share. With such large magnitude and market share, Chinese government definitely knows that the services of Alipay would be used by a crypto enthusiast to trade cryptocurrencies and it is believed that the regulators need to clip it. Joseph Young too tweeted the same saying that China ban in 2017 the citizens of China would have been actively trading Bitcoin. Alipay’s ban would also further strengthen the ban that the government imposed on accessing around 120 crypto exchanges.
China’s Alipay, fintech app used by 90% of mobile users in the country valued at $150 billion, banned all Bitcoin OTC trades using Alipay.
— Joseph Young (@iamjosephyoung) August 24, 2018
Beijing News, a media outlet administrated by the Communist Party, reported Friday that Ant Financial is beefing up efforts to monitor both merchant and customer accounts, as well as notable sites that integrate the Alipay gateway to facilitate over-the-counter (OTC) crypto trading.
For many years, Alipay and Jack Ma, the founder, and chairman of Alibaba has expressed optimism towards cryptocurrency and blockchain technology. Even though Ma described Bitcoin to have bubble-like characteristics, Ma emphasized that cryptocurrencies as consensus currencies and blockchain-based distributed systems will achieve massive mainstream adoption in the future.
A spokesperson from Ant Financial was quoted by media saying
“Alipay adheres to the principle of not providing services for virtual currency transactions,”
“We have been and will continue to closely monitor over-the-counter trading activities. If we find any transactions that we suspect are related to virtual currencies, we take appropriate measures including, but not limited to suspension of related fund transfers and permanently restricting payment collection functions of accounts involved.”
In February 2018, Alipay was pressured to eliminate cryptocurrency traders from its network indirectly, when the government of China asked all banks and financial service providers to ban Bitcoin trading accounts.
“To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,”
said an article published on Sunday night by Financial News, a publication affiliated to the People’s Bank of China (PBOC).
The Chinese clampdown intensives
Over past 72 hours, China has practically clampdown the who crypto industry in the country. After China banned all commercial events including related to cryptocurrencies, it has gone ahead and hand has blocked more than 124 overseas crypto exchanges that are offering trading services to Chinese residents. A tweet realized by the Korean Cryptocurrency and Blockchain News that mentioned, also mentions Fiat payment channels will be highly monitored apart from Communication channels and Exchange blocks.
🇨🇳 – 🤦♂️ F that Coin.
Hint above for the word scramble below. pic.twitter.com/RnAzZgJVGm
— Korean Cryptocurrency & Blockchain News (@BlockchainROK) August 22, 2018
Another organization that had to adhere to the regulation was Tencent holdings whose popular app Wechat was asked to ban top blockchain & cryptocurrency platforms due to ‘failure to comply to regulations’ which had come as a shock to local analyst and enthusiasts.
BREAKING NEWS (CHINA): WeChat bans top blockchain & cryptocurrency platforms due to ‘failure to comply to regulations’… What implications does this have for the industry? pic.twitter.com/tJPSZ90Yyl
— BitKan (@BitKanOfficial) August 21, 2018
— 🎀 (@cryptovenus) August 21, 2018
The banned sites are reportedly Huobi International, Binance, DPRating, and TokenClub
With the way China is wiping cryptocurrencies in the country, it looks like all would touchdown to zero. All the promise that the worlds most populated country and economic giant had shown in the first half of 2018 is all going down the drain. It’s just a wait and watches what unless there is some government clarification on why all this is happening
What do you think is the actual reason behind this clampdown on activities? Do let us know your views on the same.
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com