Alibaba’s Alipay and Tencent’s Wechat Pay Require Crypto Exchange Huobi to Remove These Two Payment Methods from Its OTC Market
China’s two dominant mobile payment platforms, Alibaba’s Alipay and Tencent’s WeChat Pay, sent lawyer’s letters Friday to the major crypto exchange Huobi, requiring the latter to remove the two payment methods from its over-the-counter (OTC) market and to cease using their logos illegally, according to Chinese media Caixin.
The news came just one day after Huobi CEO Leon Li Lin claimed in the year roundup letter that the exchange is still one of the largest crypto OTC marketplaces, with over $100 million in OTC trading per day. But a public relations officer at Huobi Group told 8BTC Friday that they did not receive any lawyer’s letter.
Launched in November,2017, Huobi OTC has become a popular venue for OTC trading that directly links individual buyers to sellers among Chinese investors after Chinese authorities shut down domestic crypto exchanges and banned crypto trades in September,2017.
Although Beijing’s ban forced Huobi to relocate its exchange business to Singapore, it allows investors to use payment tools like Alipay, WeChat Pay, bank account for crypto-to-fiat OTC trading.
But now the two largest payment platforms controlled by China’s tech giants Alibaba and Tencent pose a major challenge for Huobi’s booming OTC crypto business as they are scrambling to keep up with Chinese financial regulators.
WeChat Pay told Caixin it did not support virtual currency tradings, contending the use of WeChat Pay logo on Huobi OTC was unauthorized. According to WeChat Pay,it will restrict payment collection functions of trading platforms’ accounts involved; individual buyers to sellers’ accounts that are found to be involved in crypto transactions will also be limited collections but are permitted to process daily social business. In addition, WeChat Pay is conducting real-time monitoring of daily transactions and will directly block suspicious transactions based on risk assessment.
Like WeChat Pay, Alipay, the mobile payment arm of Chinese behemoth Alibaba told Caixin that it firmly refused to provide crypto exchanges with relevant services, and found no violations so far. But It will take legal actions against the illegal use of Alipay logos. If crypto-related suspitous transactions are verified, it will impose restrictions on account collection functions.
Moreover, China payment card issuer UnionPay is stepping up the fight against money laundering and alerting the public to crypto-related financial risks in an effort to prevent China-founded cryptocurrency exchanges from dealing with trades tied to the country’s fiat currency, the renminbi.
An industry insider who are familiar with Huobi OTC said although Alipay and WeChat Pay do not provide Huobi with interface of collection function, the digital asset exchange allows OTC traders to upload an image of Alipay’s or WeChat Pay’s QR code to facilitate exchanging fiat currency to bitcoins and other cryptocurrencies, which is seen as a peer to peer payment.
At the press time, Huobi has not removed logos of Alipay and Wechat Pay from its OTC marketplace, and it remains unclear what immediate impact this may have on China’s OTC crypto trading.