Popular Chinese social messaging and payments platform, WeChat has updated its payments policy page in what its notes as a way of complying with directives from the People’s Bank of China (PBoC).
However, the move generally seems like another effort to restrict the use of cryptocurrencies in the country among other things.
A section of WeChat’s revised Payments Policy Protocol mentioned that merchants on the platform would lose access to their accounts if they “either directly or indirectly” get involved with “any initial coin offering activities or operating virtual currency trading.”
The new directive will come into force as soon as the end of this month with merchants expected to reach compliance before then or risk being kicked out of the platform.
How the WeChat Ban Affects the Cryptocurrency Market
For the basics, merchants on WeChat represent account holders who signed up to the platform as a corporate organization, instead of as individuals.
Given that WeChat serves as a venue for such entities to circumvent the country’s near ban on cryptocurrency by trading over-the-counter (OTC), the latest ban will likely rule out any chances of that happening.
Such as situation as Dovey Wan, Founding Partner at crypto-asset Primitive suggested will “impact local liquidity to quite some extent.” In other words, merchant crypto traders in China will face a hard time in converting the local currency (Yuan) to cryptocurrency. The new restrictions purportedly backed by the PBoC is only meant to make it even more difficult for the Chinese populace to trade cryptocurrencies against the wishes of the government.
In a related development, Stmarket.co reported in January that Indian Banks adopted a stance similar to WeChat’s. Before they can operate local bank accounts, Indian natives are made to sign an agreement not to use their funds for any cryptocurrency-related transactions.