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China Extends Crypto-Related Promotion Ban Beyond the Capital

China’s anti-crypto onslaught continues, as a prohibition against commercial venues from hosting crypto-related events has been extended to Guangzhou Development District, local media outlet Jiemian reports August 29.

Guangzhou Development District is a special economic zone in southern China, close to Hong Kong. The district’s Financial Development Bureau reportedly issued a notice of the new ban August 24, warning of the need to “maintain the security and stability of the financial system.”

As reported last week, the move follows an almost identical ban first imposed upon venues in Beijing’s Chaoyang district in mid-August.

China’s has this month redoubled its efforts to crackdown on the domestic crypto space. A spate of fresh measures have targeted communication channels and other “loopholes” through which Chinese investors can gain exposure to Initial Coin Offerings (ICOs) and crypto trading.

On August 21, the 1-billion-user social media platform WeChat permanently blocked a number of high-profile crypto and blockchain-related accounts that were accused of publishing crypto “hype” in violation of regulations introduced earlier this month. WeChat operator Tencent subsequently issued a statement announcing a ban on crypto trading, with other tech giants also following Beijing’s draconian lead.

China’s ‘Google,’ Baidu, has closed at least two popular crypto-related chat forums, with a notice reportedly informing users that the move comes “in accordance with relevant laws, regulations and policies.”

Chinese e-commerce giant Alibaba – whose subsidiary Ant Financial runs the popular internet payment app Alipay – has now clarified that it will restrict or permanently ban any accounts it finds to be engaged in crypto trading. On August 24, Alipay had first targeted those accounts using its network to transact in Bitcoin (BTC) over-the-counter (OTC) trades.

On August 24, the People’s Bank of China (PBoC) issued its own risk alert against “illegal” ICOs, warning that blockchain and the idea of “financial innovation” are being used to lure investors as a “gimmick” that conceals essentially fraudulent Ponzi schemes.

New measures are also reportedly underway to bolster the “clean-up” of third-party crypto payment channels, including those used for OTC trade. This January, Beijing banned fringe platforms including peer-to-peer (P2P) and OTC resources, tightening a blanket embargo on crypto-to-fiat trading and ICOs in place since September 2017.

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China: Alibaba’s Alipay Reveals Government Partnership to Track Rice With Blockchain

Alipay and its parent company Ant Financial announced a partnership with local Chinese authorities to use blockchain for ensuring the authenticity of rice, local media report August 28.

A major player in the Chinese market, Alipay boasted 400 million users in August 2017. The company is owned by Alibaba affiliate Ant Financial.

According to Global Times, the deal with the municipal government in Wuchang in Heilongjiang Province aims to stop counterfeit versions of the well-known Wuchang rice making it into the market.

“This is the first time that Wuchang Rice has changed the long-distance distribution method for the whole country, shortening the original delivery time of 3-7 days to less than 2 days,” the publication adds about the benefits of blockchain introduction:

“Information such as warehousing, delivery, and trucking of warehousing and distribution links is also visible to consumers in real time.”

The move comes a week after China ramped up its cryptocurrency ban with further blocks on exchanges and exchange of information about the sector.

On the contrary, blockchain continues to capture the imagination of Beijing, with various partnerships and integrations ongoing within both the state and private sectors.

Alipay has also taken a tough stance on users performing cryptocurrency trading using its accounts, Cointelegraph reported over the weekend, while in June, Ant Financial began a blockchain remittance project with the Philippines.

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Chinese Crypto Bans on WeChat Accounts, Events, and Exchanges: What Happened and Why

This week, the government of China has cracked down on crypto-related WeChat accounts, blockchain events and digital asset exchanges, solidifying its negative stance on cryptocurrency trading and the Initial Coin Offering (ICO) market.

WeChat ban and PBoC’s warning against ICOs

On Aug. 22, Cointelegraph reported that WeChat, China’s biggest messaging app that has over 1 billion active monthly users, banned the accounts of cryptocurrency investors, users and businesses.

At the time, Lanjinger, a local financial media outlet, reported that the accounts of Deepchain, Huobi News, Node Capital-backed Jinse and CoinDaily were suspended or taken down permanently, as they violated its policy entitled “Interim Provisions on the Development of Public Information Services for Instant Messaging Tools” by promoting ICOs and cryptocurrency trading.

While CoinDaily confirmed that its WeChat channel with more than 100,000 subscribers was suspended by WeChat, Leonhard Weese, the president of the Bitcoin Association of Hong Kong, said to Cointelegraph that many accounts — destined to have been temporarily or permanently suspended — were actually taken down due to other sensitive subjects outside of crypto:

“They got blocked for talking about the vaccination scandal, not because of crypto. We find this counterintuitive, but reporting on scandals like that is far more sensitive than talking about crypto or doing crypto. I expect them to have their accounts reinstated in a week or a month.”

Expert argues WeChat ban is unrelated to crypto

In late July, the Chinese medical industry was involved in a major scandal after the country’s main drug industry watchdog released its findings that accused two pharmaceutical firms of developing inferior vaccines and deceiving local regulators.

Specifically, Changsheng Biotechnology was said to have released falsified data on the sale of more than a quarter million ineffective diphtheria, whooping cough and tetanus vaccinations, as Fortune reported.

Weese argued that, given the magnitude of the scandal in China and the global medicine sector, it is more likely that apart from the case of large-scale cryptocurrency accounts like CoinDaily, Deepchain, and Huobi News, most of the accounts that were banned by WeChat were involved in spreading misinformation about the scandal.

But, as one WeChat official confirmed to Lanjinger, the Chinese government vowed to take a stricter approach in cracking down on ICOs and token sales, and Chinese social media platforms will continue to shut down the accounts of individuals and businesses that are utilized to promote and advertise ICOs in the Chinese market, which were banned by the government in late 2017.

“[Accounts were permanently shut down for being] suspected of publishing information related to ICOs [initial coin offerings] and speculations on cryptocurrency trading,” the official said.

In a statement obtained by South China Morning Post (SCMP), the Huobi team denied that the ban of its account was related to the government’s restriction of cryptocurrency, but rather by the “broad action targeting industrial media” by WeChat.

Facebook blockchain initiative to affect China relationship?

In July 2018, Facebook, which was banned in China in 2008obtained a license to operate an office in China. The social media conglomerate has opened a $30 million subsidiary called Facebook Technology in Hangzhou to finance emerging startups and technology-related initiatives.

“We are interested in setting up an innovation hub in Zhejiang to support Chinese developers, innovators and start-ups,” Facebook told Verge in a statement.

Given the rumors around Facebook wanting to introduce its own cryptocurrency to the global market, it remains unclear whether Facebook’s supposed idea of integrating cryptocurrencies or launching its own blockchain platform could impact its current relationship with the Chinese government.

Chinese social media platforms like Baidu and WeChat have not seen any rumors in both domestic and international cryptocurrency communities regarding cryptocurrency and blockchain-related initiatives, possibly to avoid any conflict with local financial regulators.

PBoC issues warning against ICOs

On Aug. 25, the People’s Bank of China (PBoC), the central bank of the country, issued a warning against ICOs, firmly declaring that raising funds through token sales is illegal in the country. The PBoC and local financial authorities added in an official announcement that it was difficult to track and monitor transactions made through ICOs, even if the token sales are done domestically.

“The funds for these illegal activities are mostly overseas, and supervision and tracking are very difficult.”  

The PBoC further emphasized that, while the country has encouraged the development and commercialization of blockchain technology, ICOs cannot be considered to be legitimate operations or developments on the blockchain. The document reads:

“Such activities are not really based on blockchain technology, but rather the practice of speculative blockchain concepts for illegal fundraising, pyramid schemes and fraud. The main features are as follows:

  1. Risk of illegal activities, unregulated overseas markets and inability to track or monitor transactions made in ICOs.
  2. Deceptive, opaque and concealed fundraising methods, relying on celebrities and influencers to manufacture hype around investments to tempt investors.
  3. Illegal operations like profit-generating pyramid schemes and creating Ponzi schemes by describing them as ‘financial innovations.’”

Sheng Songcheng, an adviser to the People’s Bank of China, also confirmed to state-owned publication ce.cn that the government has decided to strengthen its ban on ICOs, banning public accounts, channels and communication platforms utilized to spread information about token sales.

Rise of OTC trading, Alipay takes notice

In December of last year, during the peak of the cryptocurrency market, when the combined valuation of all of the digital assets in the market totaled at $900 billion, China’s National Committee of Experts on Internet Financial Security — a government-backed research group — reported that the volume of the over-the-counter (OTC) Bitcoin market was rapidly increasing.

“Over-the-counter trading is booming. This warrants further attention,” the researchers said.

At the time, speaking to South China Morning Post, biggest mainstream publication in Hong Kong, Weese said that Telegram has been the go-to platform for large OTC trades due to the connections between local financial authorities and the operators of WeChat, but that a small portion of investors were still using the Chinese messaging platform. Weese explained:

“Telegram is very popular for large, over-the-counter trades. While WeChat is used by the less paranoid.”

Operators of various cryptocurrency exchanges and OTC platforms — including Tidebit — confirmed the rise in activity in the Bitcoin OTC market, stating that investors who could no longer trade within the Chinese market have started to explore peer-to-peer alternatives to invest in the asset class.

This week, Alipay — the most widely utilized fintech platform in China, with a 90 percent market share and a $150 billion market valuation — formally banned OTC trading on the Alipay network, preventing users of the Alipay mobile app to initiate transactions for Bitcoin or digital asset purchases.

Red Li, a cryptocurrency researcher and the founder of Chinese cryptocurrency community 8BTC, revealed that Alipay has begun the process of shutting down accounts involved in OTC Bitcoin trading, most likely due to the government’s request for banks and financial networks to shut down all possible payment channels that could be used to send funds to cryptocurrency trading platforms.

A rough translation of the statement released by Alipay disclosed the intention of the company to permanently ban any account that is reasonably suspected of funding Bitcoin exchanges to invest in the cryptocurrency space.

With the prohibition of OTC cryptocurrency trading by Alipay, the only channel that is left for local investors to allocate funds into the cryptocurrency market is the Hong Kong cryptocurrency exchange market.

Given that investors in China still send millions of dollars to Hong Kong shell companies’ bank accounts to purchase multi-million dollar properties on the Hong Kong real estate market, the possibility of investing through Hong Kong digital asset trading platforms with local bank accounts still exists.

But, due to the country’s strict capital controls and the government’s newly implemented initiative to track down savings and brokerage accounts utilized to evade taxes, it could become even more difficult to send money out of China to overseas markets.

Ban of crypto events

This week, Binance — the world’s largest cryptocurrency exchange by daily trading volume — had to cancel a cryptocurrency-related event in Beijing on August 23, as the government announced a ban on commercial blockchain conferences and meetups.

The local government of the Chaoyang District in Beijing revealed that it has informed hotels and other large-scale venues in the country that they are not allowed to host events that are related to cryptocurrency and blockchain, as part of its larger initiative to completely crackdown on ICOs and distributed fundraising.

In an interview with The Wall Street Journal, a Binance spokeswoman said that she was not aware of the closure of the event because the exchange hosts many events across the world.

“We have so many meetups around the world, and [they] may be canceled due to any reason.”

The People’s Daily, the publication operated by the Communist Party, reported that so-called venture capital-backed media outlets in China have made a significant fortune by creating hype around ICOs, but it is unsure whether the publications will be able to continue promoting ICOs in the long term. The publication could lead investors to believe that local authorities may target independent media outlets that promote ICOs in the months to come.

“These ‘media’ outlets have made huge fortunes in the speculative waves of cryptocurrencies, but due to their nature, it’s doubtful how long their barbaric growth can keep on going.”

Conclusively, in the past two months, the government of China has allocated the majority of its resources to strengthening its ban on cryptocurrency trading and the ICO market.

Given the censorship practiced by WeChat, Alipay and other platforms, along with Beijing’s ban on crypto events, it is likely that the country will see a decline in the adoption of blockchain technology and cryptocurrency development, which is ironic, as China has spent more than $3 billion in funding blockchain projects this year.

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China’s Crypto Crackdown Continues — Alipay Bans Bitcoin OTC Accounts

The most recent round of China’s crypto crackdown has continued, with the Alipay mobile payment processing service banning accounts that are affiliated with over-the-counter (OTC) Bitcoin trading. This news comes via a report from Beijing News, who broke this news in the early morning on August 24th.

The payment processing service in question is the Hangzhou-based (China) Alipay, which is owned by the multi-national conglomerate that is the similarly-named Alibaba, one of the most influential and valuable companies in the world. According to the aforementioned news report, Alipay will now be putting restrictions, or even outright banning accounts that propagate OTC cryptocurrency trading.

Additionally, to prevent future occurrences of OTC trading on the payment platform, Alipay will reportedly keep a close eye on suspicious accounts, while also installing an inspection system for “key websites and accounts” as CoinTelegraph puts it.

While Alipay may seem like a cumbersome method of cryptocurrency trading, after the Chinese government banned crypto exchanges from providing service to Chinese citizens, committed traders had to get creative, hailing in a short era of back-alley transactions and the like.

Red Li, the co-founder of 8Btc, a popular China-based community of crypto and blockchain enthusiasts, confirmed this restriction, relaying the news on his Twitter account.

Ant Financial, which runs Alipay, see “virtual currency trading” as a large risk to its users, hence why the firm hasn’t made a foray into offering crypto exchange services. Additionally, the report added that the firm has planes to “resolutely” strike down accounts that are suspected for virtual currency-related transactions or business operations.

Along with restricting such accounts, Ant Financial added that it will create a “risk prevention education” module for its users, in a bid to “remind users not to be deceived by various false propaganda, to recognize the risks of virtual currency transactions, and to avoid the possible losses suffered.”

China’s Relentless Crypto Aversion

It has become apparent that this move is just another one of the Chinese government’s attempts to stave off the propagation of cryptocurrencies, which they evidently see as a threat to China’s traditional systems. As reported by Ethereum World News, China’s National Fintech Risk office recently identified 124 cryptocurrency exchange platforms that were still available for Chinese citizens.

As China has banned overseas cryptocurrency exchanges time and time again, the country’s firewall quickly swallowed up access to these sites. Along with banning the aforementioned platforms, the governmental organization also noted that it plans to introduce monitoring systems to ensure no foreign exchanges sneak under China’s ‘great firewall’.

In related news, Chinese technology giant Tencent banned over eight crypto-centric news outlets on its WeChat mobile platform, which has become a primary mode of communication in the Asian region. Citing new governmental regulations, Tencent noted that it banned these accounts due to suspicions of “publishing information related to initial coin offerings (ICOs),” along with spreading crypto-related hype.  Last but not least, Beijing’s Chaoyang district has also revealed that it has banned local hotels, shopping malls and office buildings from hosting crypto-related events.

While one of the world’s largest economies still seems to have an aversion towards cryptocurrencies, governmental organizations have still openly endorsed and financially supported blockchain startups that intend to overhaul China’s legacy systems.

Photo by Jennifer Chen on Unsplash

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WeChat, Alipay to Block Crypto Transactions on Payment Platforms

Chinese mobile payment platforms WeChat Pay and Alipay are scrambling to keep up with regulators after recent announcements regarding initial coin offerings (ICOs) and cryptocurrencies.

Both payment giants have said that they will work with the government agencies closely to monitor cryptocurrency transactions, according to news releases on August 24.

As CoinDesk reported on Friday, five high-level regulatory agencies in China – including the People’s Bank of China and the Banking Regulatory Commission – issued a warning against any cryptocurrency-related fundraising and trading activities.

In a release published by Tencent, the parent company of WeChat Pay, not long after the news came out, the company said that it has come up with three main measures to regulate any “problematic” platforms related to ICOs and cryptocurrencies.

Specifically, the tech giant said that it will prohibit users from using WeChat payments to make any virtual currency-related transactions. Moreover, it will conduct both real-time monitoring of daily transactions and risk assessment of any suspicious transactions.

At the same time, in an exclusive interview with BJ News, a local news outlet based in Beijing, Alibaba Group affiliate Ant Financial, which owns Alipay, said that depending on the situation, it will restrict or permanently ban any personal Alipay accounts that are involved in cryptocurrency transactions.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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China's Payments Giant AliPay Takes Measures Against OTC Crypto Trading via Its Platform

Chinese mobile payment app Alipay is toughening its stance towards users who use their Alipay accounts for over-the-counter (OTC) Bitcoin (BTC) trading, Beijing News website reports August 24.

The overwhelmingly popular Alipay counted 400 million users as of August 2017, and is run by Alibaba affiliate Ant Financial, which has recently been valued as high as $150 billion.

According to Beijing News, Alipay is now taking measures to restrict and even permanently block those accounts that use its network to transact Bitcoin OTC, as well as establishing an inspection system for “key websites and accounts.”

This January, a fresh crackdown from Beijing notably saw fringe trading platforms such as peer-to-peer (P2P) and OTC resources banned, adding to a blanket embargo on crypto-to-fiat trading and initial coin offerings (ICOs) in place since September 2017.

Red Li, the co-founder of Chinese crypto community 8BTC, has tweeted a screenshot of the announcement from Alipay, stating that “#alipay is blocking accounts involved in bitcoin otc trading”:

Beijing News further cites sources from Ant Financial that claim the financial services giant will also conduct a “risk prevention” program intended to educate users about the dangers of false crypto-related “propaganda.”

As Cointelegraph reported, Ant Financial CEO Eric Jing has voiced sharp criticism of ICOs, claiming in March that they are founded upon a concept of “nothingness.”

Jing’s harsh stance was nonetheless counterbalanced by his strong optimism about blockchain. In 2017, the CEO said that he “definitely” expected to see the technology becoming “deeply” implemented into Alipay in future, eventually acting as a base protocol for the payment app.

This June, Ant Financial entered into “definitive agreements” with investors to secure $14 bln in a Series C equity financing round, intending to spend the capital on pursuing blockchain and related technological innovations.

Today’s news from Alipay follows close upon the heels of an onslaught of toughened anti-crypto measures in China, including this week’s ban on all commercial venues from hosting any crypto-related events in Beijing’s Chaoyang district.

As reported August 21, China’s leading social media platform WeChat has permanently blocked a number of crypto and blockchain related accounts suspected of publishing crypto “hype” in violation of regulations introduced earlier this month.

New measures are also reportedly underway to toughen the “clean-up” of third-party crypto payment channels, including those used by OTC platforms.

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BlockShow Panelists Argue About Bitcoin’s Decentralization, Blockchain Pros and Cons

Nouriel Roubini argues that blockchain can not compete with traditional payment systems, triggering a discussion on BTC decentralization.

Today, August 21, at BlockShow Americas 2018, speakers at a blockchain-related panel debated the question of the Bitcoin (BTC) blockchain’s decentralization and the benefits of its applications to the global community.

At the discussion panel titled “The Great Controversy: Blockchain as Seen From Major Institutions’ Perspective,” participants argued about the actual need for blockchain applications in payment systems and questioned the decentralized nature of the Bitcoin blockchain, as well as its practical implementation by major financial institutions.

Nouriel Roubini, CEO of Roubini Macro Associates, claimed that the fintech industry “has nothing to do with blockchain,” arguing that “billions of people” manage to conduct “billions of transactions” everyday by using traditional digital payment systems such as AliPay, WeChat Pay, Square, PayPal, and others.

Roubini, who had predicted the financial crisis of 2008 and previously claimed that Bitcoin will “find its end,” stated that the basics of fintech, such as artificial intelligence (AI), big data, Internet of Things (IoT), capital markets, and others, have “zero” to do with crypto or blockchain technology. Instead, according to Roubini, the “real financial firms and projects” make “real money” by truly “revolutionizing and democratizing the financial system”:

“A poor farmer in Kenya can use M-Pesa on his own mobile phone, [and] it has nothing to do with blockchain. You can borrow money, you can lend money, can do transactions, can make a living […] Why does that have anything to do with blockchain?”

Roubini’s speech triggered a heated discussion on the actual benefits of crypto and blockchain initiated by Wall Street exec Tone Vays, a crypto and blockchain researcher and consultant.

While Vays agreed with Roubini that Bitcoin and blockchain are not the best competitors for traditional payment systems, the industry expert still cited three main reasons for Bitcoin to be able to compete on the matter, including its decentralized nature and decentralized transactions, as well as Bitcoin’s scarcity that makes it similar to gold.

Considering Bitcoin’s decentralization, Vays noted that the emergence of Bitcoin has “for the first time in human’s history” enabled an asset that is “unconfiscatable.” According to Vays, the only way to possess an asset that is not possible to be confiscated is by owning Bitcoin, noting:

“It’s not competing on the cost, the speed [or] on the cost of a transaction, it’s not competing on scale…It’s competing on a fact that your value transfer is censorship-resistant, nobody can stop that payment.”

In turn, Roubini challenged one single point cited by Vays, claiming that Bitcoin is actually confiscatable since it is subject to regulation, adding that there will be “no anonymity in Bitcoin or any other cryptocurrency” since those kinds of assets must be declared due to tax and anti-money laundering (AML) policies:

“It is a delusion to believe that this asset is anonymous and cannot be confiscated. Nonsense.”

BlockShow Americas 2018 kicked off yesterday in Las Vegas, gathering more than 1,500 attendees and 80 speakers in the crypto and blockchain industries. During the first day of the event, industry experts discussed such major issues as new perspectives offered by the technologies, the question of interaction between major financial institutions and crypto, as well as the role of a proper regulatory approach to bring on the “blockchain future.”

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Jamie Dimon Says JPMorgan Will Use Blockchain ‘for a Whole Lot of Things’

JPMorgan Chase’s Jamie Dimon was bullish on blockchain tech, but shied away from commenting on cryptocurrency, saying fiat payment apps are “the biggest potential disruption to our business” in an interview published in the July-August issue of the Harvard Business Review.

When asked about his company’s chief competitive threat, Dimon, chairman and CEO of JPMorgan Chase — the largest of America’s Big Four banks — singled out what he called “new forms of payment.” Specifically naming PayPal, Venmo and Alipay, Dimon said that “these companies are doing a good job of embedding basic banking services in their chats, their social, their shopping experience.”

While he didn’t mention crypto as a potential disruptor, when he was asked about his view on cryptocurrency in a following question, Dimon simply replied, “I probably shouldn’t say any more about cryptocurrency.” Dimon did argue that crypto is “not the same as gold or fiat currencies,” which are “supported by law, police, courts […] [are] not replicable, and there are strictures on them.” Dimon also made a point of calling blockchain technology “real,” –– which implying that crypto is not –– saying that JPMorgan is “testing it [blockchain] and will use it for a whole lot of things.”

While JPMorgan’s official position on cryptocurrency and Dimon’s opinion do not always coincide, both have seen a shift over the past year. On Sept. 13, 2017, Dimon reportedly called Bitcoin a “fraud” at an investor’s meeting, along with threatening to fire any employee trading Bitcoin on the company’s accounts.

Somewhat contrary to what Dimon told Harvard Business Review in his recent interview, in an SEC filing on Feb. 27, the bank marked cryptocurrency under the report’s “Competition” subsection, saying it could “put downward pressure on prices and fees for JPMorgan Chase’s products and services or may cause JPMorgan Chase to lose market share.”

In February of this year, a JPMorgan internal report also called cryptocurrencies the “face of the innovative maelstrom around the blockchain technology.”

When speaking with Cointelegraph in Davos in January, Dimon took a stance more similar to what he told Harvard Business review, saying he “can’t answer,” but also claiming he was “not a skeptic.”

In the last few months, however, JPMorgan — and evidently Dimon — have more explicitly come out as bullish on blockchain, with the bank even filing a blockchain-related patent on May 3.

On May 17, JPMorgan announced that they had created and filled a new position of head of crypto assets strategy.

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Alibaba’s AliPayHK, Showcases Ripple Like Remittance Service

Alibaba’s affiliate in Hong Kong, Ant Financial, launched a blockchain powered remittance service on its AliPayHK mobile platform on Monday, June 25th. At the event, Mary Grace, a Filipino worker in Hong Kong, used the service to send money back home in a matter of three seconds. The usual process of sending money from Hong Kong to the Philippines could take up to 10 days, but this time frame has been shortened by the new platform that is as a result of AliPayHK partnering with GCash.

The launch comes at an opportune time for the city of Hong Kong has long had a reputation for lagging behind in terms of adopting fintech solutions when compared to mainland China and Singapore. AliPayHK’s partner in this new service, GCash, is a Philippines based micro-payment service operated by Globe Telecom in the same country.

At the event was Alibaba’s founder Jack Ma, who used the event to popularize his idea that blockchain technology should not be used to enrich a few, but rather to help provide financial services to the over 1.7 Billion people globally that are without access to bank accounts.

Jack Ma was quoted as saying:

Blockchain should not be a tech to get rich over night…There are still 1.7 billion people in the world who have no bank accounts, but most of them have mobile phones. The impact of blockchain on the future of humans may be far beyond our imagination.

Jennifer Tan, the CEO of AlipayHK would also comment the following during the event:

We are very excited to introduce this new remittance solution to our users in Hong Kong, and in particular to the Filipino community in the city. What used to be a long process of physically going to a remittance booth, queuing in line for hours and filling out forms, is now easily and securely done over the mobile phone in just a few seconds.

This move by Ant Financial through AlipayHK and GCash, makes the mobile remittance industry more exciting as the Santander bank had just recently also showcased its one OnePayFX app that uses Ripple’s xCurrent.

[Photo, Jack Ma and Mary Grace. Source, asia.nikkei.com]

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Alibaba’s Cryptic Relationship With Bitcoin and Blockchain

Since Bitcoin’s uses started to be thrashed out in forums and around dinner tables alike, there was always the belief that it would be a perfect thing for the likes of Amazon to accept. Digital cash for a digital store.

Amazon may well be getting into the blockchain game, albeit slowly, and not with Bitcoin. But what about Alibaba? Alibaba is in the East, what Amazon is in the West, and is a massive eCommerce business with huge sway and power in the tech market.

So, if Amazon’s Bitcoin, blockchain and cryptocurrency journey is pretty much mapped out and accounted for, what is the deal with Alibaba, and where do they stand on this revolutionary technology, this new form of money, and this popular digital cash?

Extended reach

Alibaba is much more than just an eCommerce site for the East. It is a holding company with 13 subsidiaries — from the main eCommerce site to a football team in Guangzhou — and over 66,000 employees.

It is obviously also a very tech-forward company, being a successful eCommerce business first, and being co-founded by Jack Ma — one of China’s richest men with a net worth of $42.7 billion — it is also a company with a lot of clout.

So, with the likes of Amazon, Microsoft, IBM, Oracle and other heavy-hitting, Western technology companies all scrambling to make sense of blockchain and cryptocurrencies with their own projects, it is interesting to look into Alibaba’s vault and see what they have been doing with the technology.

It won’t be easy to find Alibaba’s hands directly linked to Bitcoin like, for instance, in the way that many maybe would hope to see; the eCommerce store suddenly started accepting Bitcoin, but — delving deeper into the subsidiaries — there is evidence of Alibaba experimenting with blockchain itself.

Blockchain remittances

Recently, it was reported that Alibaba subsidiary Ant Financial has trialled its first blockchain remittances, sending a transaction in three seconds.

This trial saw the company completed a funds transfer between its AliPayHK app in Hong Kong and Filipino payment app GCash — its joint project with local telecoms company Globe Telecom.

Jack Ma was on hand to explain the importance of this trial and why he and Ant Financial — and thus Alibaba Holdings — thought cross-border remittance is vital, and how blockchain is a big game changer.

“Using blockchain to achieve cross-border remittances is one of my most concerned projects in the past six months. Starting from Hong Kong, this service [AlipayHK] will be brought to the rest of the world in the future.”

Clearly, Ma sees the value of blockchain technology, especially in finance. In fact, he goes on to give an even bigger insight into how blockchain and finance can help the world.

“Blockchain should not be a tech to get rich overnight. There are still 1.7 billion people in the world who have no bank accounts, but most of them have mobile phones. The impact of blockchain on the future of humans may be far beyond our imagination.”

Blockchain in healthcare

There is more evidence of Ma, and Alibaba getting its hands near — but never directly on — blockchain and cryptocurrency technology when  ZhongAn Tech announced its plans to use blockchain technology to cut risk and costs in healthcare insurance

ZhongAn, the technology incubator for ZhongAn Online Property & Casualty Insurance, was founded in 2013 by the chairman of Alibaba Group, Ma. This use of blockchain in such a space also tied in with Ma’s general thoughts on blockchain being effective for addressing privacy and security issues across all industry sectors.

Pursuing more blockchain

Furthermore, Alipay’s operator Ant Financial, a long-term subsidiary of Alibaba Group Holding, has entered into “definitive agreements” with investors to secure $14 billion in a ‘Series C’ equity financing round. The money will be spent to pursue blockchain and technological innovation.

Ant Financial’s CEO Eric Jing has said that he “definitely” expected to see blockchain becoming “deeply” implemented into Alipay in future, eventually acting as a base protocol for the popular mobile payment application.

This financial arm of Alibaba also recruited blockchain experts to actively look into the potential of blockchain technology through 2017 and surely has been building up a big base of knowledge and information on the technology.

It is more evidence of the companies in and around the conglomerate of Alibaba seeing huge worth in blockchain and financial services along with the technology. But it did not start here.

All the way back in August 2016, Alibaba introduction of tamper-proof blockchain technology to improve accountability in the Chinese charity industry. This was Ma’s first foray into blockchain technology, and — as the philanthropist has probably learnt along the way — there is a lot still that can, and should, be done with it.

Bubbly Bitcoin

All this being said and done, Ma — as the charismatic face and head of the conglomerate — has never really been a big fan of Bitcoin, or really any of the cryptocurrencies attached to the blockchain technology he clearly values.

Speaking in May, at the second World Intelligence Conference in Tianjin, Ma said that blockchain technology is not a bubble, but Bitcoin is.

Ma has always warned against those who view cryptocurrency — and blockchain — as a “huge gold mine,” even at the Bitcoin frenzy height of December 2017, Ma was perplexed at what he was seeing around the cryptocurrency space.

“I don’t know about Bitcoin at all. I’m particularly puzzled. Even if it can really work, the rules of global trade and the financial system will be completely changed. I don’t think we are ready. So I’m still paying attention to Alipay, to the U.S. dollar, and the euro. We have a team that studies blockchain, but Bitcoin is not something that I want to pursue. We don’t care about Bitcoin.”

Ma reiterated these points on June 25, in Hong Kong, when he said:

“It is not right to become rich overnight by betting on blockchain. Technology itself isn’t the bubble, but Bitcoin likely is.”

It is a telling passage from Ma and one that, in hindsight, speaks a lot of sense about the Bitcoin mania that was seen when prices topped $20,000. He admits to having a huge respect and interest in blockchain, and that his company is working to understand it better. But Bitcoin — and, by extension, any of the cryptocurrencies — are not of interest to Ma and Alibaba.

Ma held true to these words and his company’s dealings with this ecosystem are mirrored in what he says. There were rumours in January that the conglomerate had launched its own cryptocurrency mining platform but that was quashed by Alibaba.

Additionally, the online shopping website Taobao, a subsidiary of Alibaba, banned stores on the platform from providing services related to ICOs.

Ma seems to be doing all he can to separate Bitcoin from blockchain in a way that many see as impossible — or, at least, unfeasible.

Chinese mentality

It would seem that the narrative of ‘blockchain over Bitcoin’ is becoming louder, especially in China, where the country has banned all it can to do with Bitcoin and cryptocurrencies, yet still managed to make strides in blockchain technology.

Indeed, China is one of the first countries in the world to mention the technology in a state-level policy: in 2016, blockchain was added into the 13th Five-Year Plan, a road map for national development from 2016 to 2020.

China continues to communicate its appreciation of blockchain on a nationwide level: on June 4, China Central Television (CCTV), the country’s leading state-run broadcaster, issued an hour-long special about blockchain, featuring government officials as well as foreign crypto experts.

During the show, it was said that blockchain is “10 times more than that of the internet” in terms of economic value, while the technology was also dubbed as “the machine that generates trust.” The very same broadcaster, CCTV, would smear crypto projects during the clampdowns, as has been pointed out by other media outlets.

Many will argue that there is no splitting cryptocurrencies from blockchain technology, and that they are intrinsically linked, such as Elizabeth Stark, CEO of Lightning Labs, which developed the Lightning blockchain scalability protocol. Stark has spoken out against this narrative, that is not only being pitched by Ma — and the likes — in China, but also much of Wall Street, which is fearful of the financial implications that Bitcoin has on the current established order of money.

“When we first pitched my company Lightning Labs, we actually took the word ‘Bitcoin’ out of our deck and our marketing material because it was so much about blockchain. Now, I feel like we’ve entered into a ‘Bitcoin, not blockchain’ world, where people understand the value of cryptocurrency technology and what these can bring. You also have Proof-of-Work in Bitcoin, you have the public/private key cryptography. There are other things that make Bitcoin special. Somehow, the blockchain part got separated and became a thing.”

A long way from buying on Alibaba with Bitcoin

It seems, then, that those in Asia, who are waiting to spend their hard-hodled Bitcoin on Alibaba to make payments that much easier, are in for disappointment. There is nothing across the technology conglomerate that even remotely suggests that Alibaba will be accepting Bitcoin anytime soon.

The same can be said about Amazon, really. People may be polling for Amazon to accept Bitcoin, but really, their eyes are on a much bigger, blockchain prize. There may be a debate as to the possibility of separating Bitcoin and blockchain — and if it is viable or right — but what is for certain is that those at the top of their game seem to be more interested in the technology rather than the ‘prize.’

Amazon and Alibaba have both shown that — even as eCommerce companies — they can benefit a lot more from blockchain, Bitcoin, and cryptocurrency: from expanding on the underlying technology to then simply accepting the coins that come with it.

Ma’s sentiment about not becoming rich overnight by leveraging blockchain technology is entirely true. For these major businesses, there is a lot more value in going through the process of perfecting blockchain use in their sectors before really looking into generally accepting a new form of digital payment.