Chinese Payment Giant Alipay Reiterates Ban On Bitcoin-related Trades in Response to Binance’s New P2P Feature
Chinese payment giant Alipay has reiterated its anti-crypto stance on Oct. 10 saying it bans all crypto-related transactions.
The move comes on the heels of a high-profile announcement from Chaopeng Zhao, CEO of leading crypto exchange Binance, claiming that the exchange accepts fiat through Alipay and WeChat after its peer-to-peer (P2P) crypto trading for Chinese Yuan was opened on Oct.9.
Alipay: No, you cannot
In a twitter in response to Zhao, Alipay replied “No, you cannot”, with a warning that the company is closely monitoring over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations; “If any transactions are identified as being related to bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services.”
NO, you cannot. https://t.co/J0YMTz3FZW
— Alipay (@Alipay) October 10, 2019
Immediately after Alipay’s announcement, another mobile payment giant Wechat Pay also declared themselves, stating that WeChat will never support crypto trading and has never opened up to any crypto-related merchants. Meanwhile, the largest social media platform in the country added that they welcome users to report such violations.
The government doesn’t want it
Early in 2013, China’s central bank had issued notices stating financial institutions and payment agencies shall not directly or indirectly provide services for bitcoin-like cryptocurrencies such as bitcoin transaction, deposit, custody and mortgage.
As bitcoin gradually gained popularity within the country, in September 2017, the central bank, together with seven ministries, issued a notice cracking down on ICOs which are termed as illegal fundraising and banning any entities from providing services related to crypto trading. As a result, a plurality of crypto exchanges either directly shutting down or moving out of the country overnight.
Responding to the government’s stringent stance towards cryptocurrency, these heavyweight companies have made clear their attitude by blocking suspected accounts related to crypto OTC trading. A progress report in 2018 from the PBoC (China’s central bank People’s Bank of China) claimed that Alipay had monitored and closed about 3,000 accounts that are engaged in crypto trading.
OTC hardly to be banned
Over-the-counter (OTC) trading allows Chinese traders to buy and sell cryptocurrencies directly using the Chinese Yuan between two parties through Alipay, WeChat Pay and bank transfers, which has long been the main channel to buy or sell cryptos directly with Chinese yuan in the country.
Chinese yuan-to-crypto P2P trades feature on OKEx shows Alipay and WeChatPay are preferred payment method rather than bank transfers, though it’s difficult to measure the volume
Despite the government’s hostility, these crypto exchanges which have relocated overseas could continue to serve the users within the country with Chinese yuan-to-crypto OTC offering available. And Binance is the latest to add such feature, but its high profile immediately triggered the nerve of the largest payment agencies in the country who have to alienate themselves from crypto trading and declare their innocence.
In practice, however, peer-to-peer trading can hardly be banned as mobile payment is ubiquitous in the country thanks to Alipay and WeChat Pay, in which case it is difficult for them to detect bitcoin-related transactions among billions of daily transactions unless traders label “BTC” or “buying bitcoin” in the transaction remarks, obviously sophisticated crypto traders would not do that.