Alipay slaps ban on OTC bitcoin trading
China’s Alipay, the country’s biggest payments app, has officially banned over-the-counter (OTC) Bitcoin trading, preventing traders from utilising Alipay accounts to initiate digital asset trades.
Alipay’s announcement was shared by Red Li, a cryptocurrency researcher and co-founder of Chinese cryptocurrency community 8BTC. It explicitly stated that Alipay users are not allowed to use the financial network to trade bitcoin in OTC and unregulated markets.
Ant Financial, the payments affiliate of multinational e-commerce giant Alibaba, is the parent of Alipay. Th company’s valuation increased to $150bn in May after it secured a $10bn funding round, helped by the healthy growth rate of Alipay as its core business. The additional funding was earmarked for funding the expansion of the Alipay fintech network outside of China.
Change of attitude
Both Alipay and Alibaba’s founder, and chairman Jack Ma have spoken positively about cryptocurrency and blockchain technology. Although Ma acknowledged Bitcoin had bubble-like characteristics, he was optimistic that cryptocurrencies as consensus currencies and blockchain-based distributed systems will achieve massive mainstream adoption in the future.
However, this enthusiasm has increasingly contrasted with the hostility of the Chines government, which in February asked banks and financial service providers to ban bitcoin trading accounts. This put Alipay under pressure to eliminate cryptocurrency traders from its network.
Reports suggest that many traders in China may have been trading bitcoin in a peer-to-peer (P2P) manner in the OTC and unregulated market, without the authorisation of the government. Alipay was therefore asked to prevent its financial network from being used to fuel cryptocurrency trades.
Bitcoin trading and digital asset exchanges were banned by the Chinese government in last September, and the government’s stance towards the cryptocurrency exchange market has not eased since.
Alipay’s prohibition of bitcoin trading solidified the viewpoint of China towards digital asset trading, which is banned as a part of a larger initiative to strengthen capital controls.