- Facebook’s Proposed Cryptocurrency Poses a Threat to Already Existing Digital Payment Systems
- Global Regulators Also See Facebook’s Libra as a Threat
Tencent Holdings, a Chinese tech giant has admitted that Facebook’s proposed cryptocurrency Libra could pose a serious threat to already existing digital payment systems, including its own WeChat Pay and Alipay from rival Alibaba Group Holding. In the press release by Tencent, it stated: “Libra, if launched successfully … would not only impact traditional financial institutions but also undermine internet firms, including Tencent and Alibaba, which have their own relatively mature payment systems, hindering their global expansion.”
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Facebook revealed its plan to create its cryptocurrency in June, according to Facebook the aim of the coin is to link it to a chain of currencies backed by reserves, subject to regulatory approval. Currently, Facebook has about 2.7 billion users on its social media platform as well as the backing of global payment, telecommunication, blockchain, technology and venture capital firm for the plan.
The threat as recognized by the Chinese Tencent is the possibility of a universal user base for Libra and extensive services proffered by its backers would affect the universal growth of digital payment companies who are not part of the Libra club.
Tencent runs China’s main social media and WeChat with over 1 billion daily active users, and its WeChat is one of the largest digital payment services with Alibaba’s Alipay.
Global Regulators Also See Facebook’s Libra as a Threat
Tencent stated that Libra plans to begin with developing countries with weak financial structures, particularly those without easy access to credit money and then slowly enter the already developed market. It stated that “the plan is radical and bold but clear-headed and prudent.” It went on to explain that Libra could change the global payments and financial landscape by creating innovations in user’s experience, business models and technology.
All these statements from Tencent came amid the dialogue between global regulators and Libra, as Global Regulators also see Libra as a possible change of the global financial system. In all of these, China also is planning to create its digital currency after recognizing the pace at which cryptocurrency is evolving. In a hearing with the US Congress, Facebook’s CEO, Mark Zuckerberg stated: “While we debate these issues, the rest of the world isn’t waiting, China is moving quickly to launch similar ideas in the coming months.”
Earlier this month, Alipay and WeChat issued statements about their policies which does not permit transactions related to cryptocurrency trading on their payment platforms. In a tweet from Alipay, it stated: “To reiterate, Alipay closely monitors over-the-counter transactions to identify irregular behavior and ensure compliance with relevant regulations, if any transactions are identified as being related to bitcoin or other virtual currencies, Alipay immediately stops the relevant payment services.”