Chinese social media platform WeChat has banned all cryptocurrency transactions with immediate effect following an update to its payment policy, according to reports.
In a huge blow with potential liquidity implications for local markets, the social media and payment services company reportedly now states that users who continue to transact in cryptocurrencies on the platform will have their user accounts terminated.
Co-founder of crypto asset fund Primitive, Dovey Wan, broke the news with a tweet critical of the change in WeChat’s payment policy, stating: “Urgh, Wechat just updated its payment policy .. merchant can’t serve any token issuance/fund raising or crypto trading activities, otherwise account will be terminated…“
In the tweet, she goes on to describe the impact this could have on local liquidity, causing further concern for cryptocurrency speculators: “Given most OTC transactions are happening in wechat, this may impact local liquidity to quite some extent.”
WeChat is a popular messaging app in China, used widely throughout the country. Its payment platform is also widely used, with the change in policy expected to dent cryptocurrency transaction volumes across the country.
WeChat Pay is a mainstream payment platform in China, boasting some 1.089 billion users with strong uptake nationwide—including 98.5% of 50- to 80-year-olds.
The new policy is set to be in effect starting on the end of May, and comes with tight new restrictions on sellers.
Under the new policy, merchants may “not engage in illegal transactions such as virtual currency.” The policy also contains several other restrictions, including prohibitions on issuing new tokens or promoting gambling or pornography through the WeChat platform.
The news comes just weeks after it was reported that the city of Guangzhou had issued a commercial license on a platform powered by blockchain and connected to the WeChat platform.
With the new policy expected to cause further pressures for the cryptocurrency sector in China in upcoming months, it remains to be seen how significantly this affects prices in local cryptocurrency markets.
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