Tencent Says Libra Would Pose Serious Threat to Alipay, WeChat Pay

Chinese internet giant and parent of WeChat, Tencent said Libra would pose serious risks to current digital payment systems in the country.

Oct 24, 2019 at 2:01 a.m. UTC
Updated Sep 13, 2021 at 11:37 a.m. UTC

Tencent, the Chinese internet giant and parent of messaging app WeChat, said the proposed launch of Facebook’s Libra cryptocurrency would pose serious risks to existing digital payment systems.

In a blockchain whitepaper published in Chinese this week, Tencent said Facebook’s Libra initiative seems “bold and radical” but is actually a “prudent and rational” move for the Silicon Valley giant.

The Libra coin could quickly win market share in countries that do not have a credible local currency of their own, or in places where people do not have access to basic financial infrastructure, it continued. But that would be direct competition the Chinese companies could not replicate.

“Any internet company that has a relatively mature digital payment system, such as WeChat Pay and Alipay, would be threatened by the stablecoin if it is ever launched," the whitepaper reads.

China's central bank has been working on its own national digital currency for the past few years, while banning any fiat-to-crypto trading activities in the country since 2017. Neither Tencent nor Alibaba, which operates WeChat Pay's competitor Alipay, is involved in any known cryptocurrency or trading projects.

With more than 1 billion active daily users on Tencent’s social media WeChat, its digital payment spinoff WeChat Pay is one of the two leading companies in the industry, along with Alipay, the mobile payment affiliate of Alibaba Group.

Both WeChat and Alipay have insisted on a firm stance against crypto exchanges using their payment services as a gateway for Chinese customers' fiat on-ramp in a peer-to-peer fashion through over-the-counter trading.

“WeChat Pay does not support crypto trading, and the platform has never been open to any crypto category,” the company's official account said in a post on Weibo.

“We welcome users to report on any crypto trading on our platform and proactively collaborate with authorities to crack down on such activities,” WeChat added in the post.

Alipay also reiterated its ban on crypto trading in a recently tweet directed at Binance when the exchange enabled over-the-counter trading that would allow Chinese users to exchange crypto assets with a counter-party and settle payments via peer-to-peer transactions on Alipay.

Alipay said in the tweet:

“If any transactions are identified as being related to bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services.”

And yet while both Chinese companies share the official stance on crypto assets, they are heavily investing in blockchain and cloud computing technologies.

WeChat parent Tencent has been building a suite of blockchain services since they released their first white paper in 2017.

The company’s new TrustSQL platform is designed as a three-part system with the core chain layer, a product and service layer, and an application layer to provide digital asset management and authentication.

Tencent led a $20 million Series A round in blockchain provenance startup Everledger, also participated in by asset manager Fidelity Investments, in September.

The company also partnered with Intel to develop a blockchain for internet of things applications, while starting to test blockchain financial applications with the Bank of China in 2017.

In 2018, Alipay’s parent Alibaba Group actually topped the list with a total of 90 patent applications focused on blockchain-related technologies, even more than other multinational companies including IBM, Mastercard and the Bank of America.

“The launch of Libra would significantly affect the course of global expansion for digital payment companies, especially for those who are not in the Libra consortium,” Tencent's whitepaper said.

Tencent, with a market cap of nearly $400 billion, has been a communications and internet leader in China since the very beginning. Founded in 1998, the company's name echos the prior decade's favorite technology, the belt clip beeper, or pager. Known across China as "cent," that suffix was added to the last character "teng" of the founder's name, Huateng Ma, according to Shenzhen tech lore. Tencent's first product was online software to send messages from computers to pagers.

Tencent image via Shutterstock

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
After the Terra Meltdown: What's Next for Stablecoins?

The largest token collapse in crypto history. So let Luna die.

The largest token collapse in crypto history. So let Luna die.

CoinDesk - Unknown
2
CoinDesk - Unknown
5 Key Takeaways From a16z's State of Crypto Report

The venture firm is extremely bullish on Web 3.

The venture firm is extremely bullish on Web 3.

CoinDesk - Unknown
3
CoinDesk - Unknown
Regulators Are Paying Attention to UST

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

The collapse of terraUSD (UST) is algorithmic stablecoins’ Libra moment.

CoinDesk - Unknown
4
CoinDesk - Unknown
San Francisco NFL Player Alex Barrett Taking His Salary in Bitcoin

The most valuable crypto stories for Thursday, May 20, 2022.

The most valuable crypto stories for Thursday, May 20, 2022.

CoinDesk - Unknown