Messaging application WeChat has taken action to prevent merchants using its services from dealing in cryptocurrencies.
At the end of April, the company released a new policy for merchants that prohibits them from dealing in digital assets.
“In the course of making payment transactions, you should strictly abide by the policies and regulations related to the online banking business and credit card transactions of the People’s Bank of China,” says the new policy.
“You may not directly or covertly engage with… token issuing financing and virtual currency trading platforms.”
The new policy will go into effect on May 31 and, it appears, only applies to merchants. That means individuals using the platform are, at least in theory, immune from the effects of the policy change.
Nonetheless, it’s a worrying sign that Chinese authorities are clamping down cryptocurrency trading. The Chinese Communist Party has already banned initial coin offerings and cryptocurrency exchanges from the world’s most populated country.
Keeping the FX market in check
That’s in large part because of the tight stranglehold it likes to keep on foreign exchange in the country.
China likes to play with its currency in order to maintain specific trade policies. Cryptocurrency, which in the event of a yuan devaluation could allow Chinese people to transfer funds out of the country, hinders those efforts.
And WeChat, which has more than a billion users in China, plays a central role in the country’s cryptocurrency market.
Traders frequently use the application’s payment services to – in a roundabout way – buy and sell digital assets.
That’s likely now to come to an end. Payment merchants that accept cryptocurrency-related business will be banned from the platform once the new policy comes into effect.
For now, regular users of the service may be able to continue transacting with one another. Thus, anyone buying cryptocurrency using the app’s P2P payments feature might still be able to do that. But, given the consequences, one faces when getting on the wrong side of Chinese authorities, it may be the case that this side of the business dies out too.