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.â€
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