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Internet Authority: History of Centralized Companies Being Hostile Toward Crypto

In the wake of CCN’s Google saga, CT looks at which centralized companies have been hostile to crypto firms in the past.

On June 10, one of the top cryptocurrency media sites, CCN, initially announced that it would shut down, citing a June 3 Google Core Update for stifling its traffic.

Writing on the website, the director and founder of CCN Markets and Hawkfish AS, Jonas Borchgrevink, blamed the update for an overnight fall of 71% of the site’s mobile traffic. While Borchgrevink noted that ups and downs are part of the business, such a vertiginous fall is unprecedented in its history. At the time of the post, the founder said that it could not support new additions to its team or its current operations from advertiser revenue in the given climate.

Within the online crypto media sphere, CCN was not alone in taking a beating. According to data from Sistrix.com, CoinDesk also experienced a drop in traffic. Crypto news took what some are alleging to be a targeted hammering, even though United Kingdom-based online media juggernaut Daily Mail also reportedly lost half of its organic website traffic.

Related to this: The Strange Case of CCN and the Google June 2019 Core Update

At the time of this post on June 10, Borchgrevink and the CCN team were at a loss as to what could have merited such a steep drop off in visibility:

“If Google thinks that CCN, all of a sudden – remember, literally overnight -, is bad, then why not give us the chance to understand the why and give us a way to change before any major update. Instead, we are kicked in the teeth overnight with zero knowledge of what we have done wrong, impacting a team of 60+ people. 6 years of work is evaporated.”

However, only two days later, on June 12, CCN reported that it had clawed its way back into existence after an intensive period of consulting with SEO gurus and experts in the Google Webmasters forum. In the post, also authored by Borchgrevink, it is clear that the team is still not entirely sure what caused the drop, but continue to reference the June 3 update:

“Whether or not the Google June 2019 Core Update is to blame, we are fixing it. We’re receiving help from multiple SEO teams to understand what has transpired.”

Expert reaction to CNN’s self-proclaimed struggles

Several members of the crypto community spoke to Cointelegraph, stating that the update serves as a prominent example of how powerful, centralized corporations can currently smother crypto initiatives. Richard Red, research lead at Decred, a community-directed digital currency, said the update presents an issue for both freedom of the press and of information:

“Regardless of how people feel about CCN, the fact that changes to Google’s search algorithm can make or break media producers is one of many illustrations of the power wielded by large tech companies running centralized services. A centralized authority that can selectively ‘hide’ content signals a broader problem with freedom of the press and the public’s ability to find information.”

Roneil Rumberg, CEO and co-founder of the decentralized music streaming platform Audius, also said this is typical of the dangers of centralized power and called for a more transparent approach to online media:

“The unfortunate situation faced by CCN is inevitable when centralized aggregators like Google control content discovery. Those whose livelihood depends on aggregators have little insight into how these services work, let alone any say in how they are changed over time. They are subject to the whims of Google, YouTube, SoundCloud, or whoever else they are contributing to, and risk being deplatformed, demonetized, or otherwise taken for granted.”

Tak Kol, co-founder of the Orbs public blockchain, also commented on Google’s power to shape opinions and called for change that allows people to protect themselves from what he sees as abuses of such power:

“The situation with CCN and publications like it shows how much power Google has in dictating which news channels can flourish and which should disappear with a behind-the-scenes change in its algorithm. There is a solution to protect ourselves against potential abuse — and this is transparency, through blockchain technology. We should demand filters like Google to be explicit regarding the criteria of what’s deemed important, and we should demand to audit that this criteria is indeed what’s executed under the hood.”

Ad nauseam: Google’s chequered past with crypto

This is not the first time that Google appears to have taken a hard line on decentralization and crypto in general. The most prominent example of hostility from Google occured in June 2018, when the company announced that it would ban all crypto-related advertising in accordance with an update to its Financial Services policy.

Timeline GFX

The official announcement came days after crypto advertisers had noticed a sharp drop in views for its advertisements. At the time, Google AdWords denied that any change in its regulations would block crypto or initial coin offering (ICO) ads. However, as previously reported by Cointelegraph, Google’s updated financial products policy clearly stated that an advertisement ban will be imposed on “cryptocurrencies and related content (including but not limited to initial coin offerings, cryptocurrency exchanges, cryptocurrency wallets, and cryptocurrency trading advice).”

The move, however, was not necessarily out of character for Google, with Google’s director of sustainable ads, Scott Spencer, demonstrating a hesitant approach to all cryptocurrencies in a March 14 interview with CNBC:

“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.”

In September, the company announced that it would revise its advertising policy in October in order to allow some crypto businesses targeting the United States and Japan.

Fast-forward to January 2019 and Google’s advertising policy on cryptocurrencies remains relatively unchanged, with smart contract auditing startup Decenter tweeting that the company has blacklisted keywords mentioning Ethereum on Google Ads.

In response, the official Google Ads account replied to the tweet, stating that exchanges are permitted to target the United States and Japan and that ads targeting other countries could be liable for rejection.

Decenter further explained that, when trying to use “ethereum development services” and “ethereum security audits” as keywords, an error message would pop up. Google Ads replied to this in a tweet:

Decenter consequently turned to the Ethereum community on Reddit, where the team stated:

“Any of the keywords that contain ‘ethereum’ in our campaigns are no longer showing ads as of January 9th and are now reporting the following error:”

Picture 1

At the time, the Reddit post’s top comment accused Google of a lack of neutrality:

“Google has various political and economic agendas, and they are quite willing to use their various services to promote their preferences. AdSense and Youtube are notorious for this, but there have been some incidents regarding the play store as well.”

Google is not the only centralized tech giant to have a troubled relationship with both crypto and crypto advertising. Prior to lifting the requirements on May 8 for crypto and blockchain promoters to get consent for running advertisements, Facebook had adopted various degrees of censorship.

In January 2018, Facebook decided to ban all cryptocurrency and ICO advertisements — a move that was widely criticized by the crypto community as unnecessary. Dejun Qian, the founder of Fusion, which provides a financial transaction ecosystem, said:

“This policy will definitely protect people from the scams of predatory projects. However announcing an ‘intentionally broad’ policy is always the easiest way and not necessarily the best route for technology development.”

Since then, Facebook has come to relax its approach to advertising as long as advertisements are not seen to be promoting one currency in particular or initial coin offerings. And Facebook has since announced that it will launch its own stablecoin.

Read more on this: Project Libra: What We Know About Facebook’s Forthcoming Cryptocurrency

E-commerce giants show uniform approach to crypto

It is not only big tech that’s showing resistance to cryptocurrencies. In 2019, two of the world’s foremost e-commerce giants demonstrated varying degrees of hostility to cryptocurrencies and associated cryptocurrency advertising.

On March 18, South America’s largest e-commerce company, Mercado Livre, banned cryptocurrency advertising on its website, according to reporting from Cointelegraph em Portugues. Mercado Livre, which recently overtook Amazon as the top e-commerce marketplace in Latin America, sent out emails to users that laid out the change in company policy. According to an email shared with Cointelegraph, all listings related to digital currency would automatically be removed from the platform as of March 19:

“We would like to inform you that as of March 19, you will no longer be able to advertise used products in the following categories:

– Cryptocurrencies

– Prepaid cards for games

“Because you have ads for used products that will soon be banned, we recommend that you end them. Otherwise, they will be finalized on the date mentioned above.”

Mercado Livre’s biggest rival, Amazon, also demonstrated its less-than-enthusiastic approach to cryptocurrencies in 2019. Twitch, a streaming company owned by the U.S. e-commerce behemoth, removed bitcoin (BTC) and bitcoin cash (BCH) as payment options for subscriptions, according to a Reddit user on March 23.

Payday blues: Payment providers close the door on crypto

Although the initial benefits of cryptocurrency for payment providers are numerous, a number of high-profile companies have either removed payment options or outright banned crypto payments.

On May 7, Dovey Wan, a founding partner of Primitive Ventures and a prominent figure in China-related crypto affairs, tweeted that the Chinese social media titan and payment service provider WeChat will ban merchants from making cryptocurrency payments.

A translation of the Payment Service Protocol, posted on weixin.qq.com, revealed that the ban is due to changes in payment regulation and efforts to ensure “the prevention of illegal telecommunications networks and criminal matters” brought about by the People’s Bank of China.

As per the screenshot posted by Wan, users who carry out crypto trades are liable to have their accounts terminated. The screenshot also shows that “merchants may not engage in illegal transactions such as virtual currency.”

Unsurprisingly, given the chilly atmosphere for cryptocurrencies in China, WeChat is far from alone in its approach. In August 2018, the mobile payment app Alipay clamped down on users who were using their accounts for over-the-counter (OTC) bitcoin trading, according to Beijing News.

As per the state-affiliated Chinese newspaper, Alipay tightened restrictions on and permanently blocked accounts carrying out bitcoin OTC trades. The article also stated that a system had been created to monitor key websites and accounts for this purpose.

Misfortune for crypto payments in China continued into 2019, when Alipay and WeChat both requested that crypto exchange Huobi remove their payment services from its OTC trading desk, according to a report by local media agency Sina published on Jan. 25.

Outside of China, the chief financial officer of PayPal said that the company is reluctant to get involved with cryptocurrencies, according to an interview with Yahoo Finance on May 7.

CFO John Rainey said that, although the company had previously allowed payments in bitcoin, the volatility of the currency meant that merchants would just convert bitcoin to a more stable currency, such as the euro or dollar. Rainey commented that, although the company is not currently interested in cryptocurrencies, he did not rule out involvement in the future:

“We have teams clearly working on blockchain and cryptocurrency as well, and we want to participate in that in whatever form it takes in the future. I just think it’s a little early on right now.”

BTC cards suffer setback, Visa and Mastercard categorize crypto as high-risk

In January, Visa ended its working relationship with debit card provider WaveCrest, affecting crypto card products provided by CryptoPay, Bitwala, Wirex and others. The move was initially believed to be a company crackdown on cryptocurrency services, but was later revealed to be due to WaveCrest violating Visa’s policies.

A Visa spokesperson commented that the issue came down to noncompliance on WaveCrest’s behalf and that it had not adopted a blanket ban on such products:

“We can confirm that WaveCrest’s Visa membership is being terminated due to continued non-compliance with our operating rules. All of WaveCrest’s Visa card programmes will be closed as a result. Visa has other approved card programmes that use fiat funds converted from cryptocurrency in a number of jurisdictions. The termination of WaveCrest’s Visa membership does not affect these other products.”

In October, Finance Magnates reported on the news that payment titans Mastercard and Visa would classify cryptocurrency and ICOs as “high risk.” The publication, which did not disclose its sources, reported that a ban will be applied to brokers operating from “unregulated or loosely regulated environments,” a sweeping description that proved damning for the wave of crypto debit cards. As no universal policy exists for regulating cryptocurrency payments, many companies offering crypto debit card services could, as a consequence, be seen as not having applied proper due diligence to their business.

The publication also referred to regulations brought in by the European Securities and Markets Authority (ESMA) in June, establishing leverage limits for local retailers in the European Union. Steve Maijoor, the ESMA chairman, said that the regulation would seek to protect investors:

“The new measures on CFDs will, for the first time, ensure that investors cannot lose more money than they put in, restrict the use of leverage and incentives, and provide understandable risk warnings for investors.”

Unregulated brokers are reportedly classified as “high-risk securities merchants” by the two biggest debit/credit card issuers. Mastercard acted on Oct. 12, 2018, and the subsequent changes would affect “all transaction globally via Mastercard, Debit Mastercard, and Maestro.”

The move to target crypto debit cards is not that surprising, given the views of management at the two payment giants. Mastercard CEO Ajaypal Banga voiced his criticism of cryptocurrencies, stating that nonstate-issued coins are junk, due to their high volatility and the as-of-yet unrealized goal of operating as a real alternative to fiat currency.

To strengthen the narrative, Mastercard released a series of anti-bitcoin videos, narrated by the president of Mastercard Southeast Asia, Matthew Driver, in which he questioned the anonymous nature of crypto transactions:

“If it’s an anonymous transaction, that sounds like a suspicious transaction. Why does somebody need to be anonymous?”

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Why Do Facebook Need A Coin If AliPay And WeChat Are Successful Without One?

Facebook

Facebook will release a cryptocurrency later this year that will allow WhatsApp users to send money instantly. Project Libra is definitely uncharted territory that raises a number of important theoretical questions about the viability and application of their stable coin, the Global coin.

Yes, you heard it right. Facebook is into Crypto; who’d have thought this possible a few years ago? The social media giant is in talks with the U.S. Commodity and Futures Trading Commission (CFTC) over the stable coin. Facebook is looking at the regulatory landscape before committing to a full release. This is because crypto is largely in legal limbo which has damped Bitcoin adoption worldwide.

The Market For Digital Payments

In the contemporary world, global digital payment options are taking an ever-increasing share of the payment market. Cash is continually on the decline and we may very well have a future where cash will be relegated down further. Ironically, in the west users are under the leash of banks. Even in mobile payment applications like Apple Pay, the banks can still have a share of the fees. This is because these payment channels are mostly tied to users’ cards and banks accounts.

Mobile Payment Solutions

The rise of mobile payment options is challenging to mainstream institutions. This is because the purely mobile payment channels will cut the banks out and make transactions smoother. The rise of payment apps like AliPay and WeChat make the market change drastically. This is because these apps can remove banks and card companies from this market which is worth tens of billions of dollars annually.

WeChat and AliPay are trailblazers in this sector. The two essentially dominate the payment industry in China with low cost faster solutions.  The ability to receive and send payments using your phone is obviously an advantage. People in China have easy solutions and commerce is better and more efficient with mobile payment solutions.

Facebook Priorities

Bitcoin has definitely had a hard time introducing mainstream consumers to the alternative world of digital coins. Therefore, Facebook will seek to succeed where Bitcoin and other altcoins failed. Obviously, impeding crypto has not succeeded because of limited market understanding and regulatory hurdles. Naturally, Mark Zuckerberg and co. would go for the more exciting innovation. Cryptocurrency success can be attributed to Facebook and take a fledgling innovation back on top. That said, the idea of market efficiency should not elude innovators and developers.

If Facebook is looking at an alternative payments solution, why not study the model of AliPay and WeChat? The American payments market is ripe for mobile payments solutions takeover. Mobile payments, as it has shown in China, are a convenient and lucrative option.

Facebook can launch a separate digital
payment option for mobile that is not necessarily blockchain-based. This would
arguably be more convenient for the social media giant. Indeed, it would be
unwise to get into the crypto market simply for the sake of having a share in
the crypto market. Facebook should, therefore, launch a coin that will
definitely improve the whole crypto industry. Otherwise, it should look at and
replicate other payment options in the market.

The post Why Do Facebook Need A Coin If AliPay And WeChat Are Successful Without One? appeared first on Ethereum World News.

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Ripple and AliPay, a Chinese Payment Giant worth $150 Billion, Alliance on the Cards?

Ripple

There could be a relationship brewing between Ripple and AliPay, the Chinese payment giant that is reportedly worth $150 billion.

Ripple and AliPay Alliance?

AliPay is currently the largest payment networks in the world and is presently valued at $150 billion. The company has been the dominant mobile and online payment service provider in China and some parts of Asia. Last year, the company reported that it has over 870 million users and the number is expected to grow as AliPay venture into other markets.

Read: Ripple Determined to Expand Its
Business to China

According to the CEO of Ripple, Brad Garlinghouse, AliPay is now looking to venture into the US market. The Ripple exec revealed that high traffic processor has high ambitions for the United States: “AliPay has grand ambitions for the United States. I’ve had conversations with people in the company, and there is a zeal to make a move into the US. The company knows that the US is a large economy and they want growth. AliPay has so far built a strong payment system around their world.”

The $150 billion company has built a secure payment system over the years, but it is currently focused around their continent. Ripple could be the company to help the Chinese giant break into the United States market. One sign that points to that happening is the presence of an AliPay Ripple URL; alipay.ripple.com

The creation of this subdomain has sparked a conversation amongst XRP loyalists, with some of them pointing out that only the Ripple.com domain has the power to create the alipay.ripple.com subdomain and Ripple would just do that if there is a partnership between the two companies or something similar to that.

Ant Financial Is A Global Company

There is a notion that AliPay is designed just for the Chinese. It is worthy to note that neither Alibaba nor Ant Financial are exclusively for Chinese. Ant Financial is a global company that is composed of apps, APIs and analytics, which help with finances.

The company grew its market value by
focusing on two critical financial trends in China; mobile payments and money
market funds for consumers. In the middle of last year, the company raised $14
billion in a funding round which brought its market valuation to $150 billion,
making Ant Financial the ninth largest internet company in the world. Its
estimate last year saw it become the tenth largest banking group in the world,
overtaking some giant firms such as Goldman Sachs, Royal Bank of Canada,
Santander, and many more.

Partnership will be Shaping

If there should be a partnership between these two ambitious players, then it would be one that could change the global banking and financial system. Ant Financial has been one of the fastest growing financial companies in the world and combining their extensive database and resources with Ripple’s technology, money transfer would be carried out in a quicker, cheaper, and more convenient manner.

Also Read: Weiss Ratings: In the US, Ripple
(XRP) More Popular than Bitcoin (BTC)

Ripple has been rolling out products
that would make cross-border and local money transactions faster, easier, and
cheaper for financial institutions. Ripple (XRP) has become the most popular
cryptocurrency in the US due to the progress made by Ripple and paving the way
for Alipay to make its entry into the country could further boost the adoption
of the cryptocurrency. At the moment, there is no concrete evidence that the
two companies are working together, but if it happens, then Ripple (XRP) could
be on its way to a massive global adoption.

The post Ripple and AliPay, a Chinese Payment Giant worth $150 Billion, Alliance on the Cards? appeared first on Ethereum World News.

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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.”