The world went Facebook mad this week as the company released a white paper for their highly anticipated ‘Libra’ token. The news had US senators scrambling for the regulation book and crypto enthusiasts debating its impact on the business when it arrives next year.
Naturally, a debate about its merits and implications was also had in China. Prominent Chinese figures of which there are many in the market reacted to Facebook’s Libra White paper.
So what does it mean for a fellow industry player like Facebook to, seemingly start the crypto journey ahead of them? Is Facebook’s Libra, with its 2.7 billion it reaches, a real threat?
Can Libra make it into China?
Currently, it would seem unlikely that the Libra token would reach the People’s Republic due to the restrictions in place on the usage of the site. The restriction and China’s hardline stance which has limited mining and other parts of the industry would also be another issue.
Yet, many commentators have suggested it will enter the market in some way. Cai Weide said, “even if Facebook can’t enter China, its payment may enter the Chinese market.” Not only that but, clearly Facebook is looking to enter the Chinese market, due to the Mandarin version of the Libra website.
Will WeChat and Alipay make their own version of Libra?
In response to the Libra news, many wondered if the companies, Tencent the brand behind WeChat and Ant Financial, the company behind Alipay and the blockchain element to them, Ant Blockchain would follow suit with their own version.
Unfortunately over the past week or so, both parent companies to the mobile paying giants in China have ruled out the possibility of a digital currency.
When speaking to Coindesk, a spokesperson for Ant Financial said that their CEOs comments about having no plans for their own digital currency still remained the same.
Tencent had a small blunder when Pony Ma, the CEO, had his views aired about the Facebook coin after someone screenshotted the conversation. In a text, he said regulations will be the biggest issue.
“The technology [of Facebook] is already mature enough so it’s not difficult [to implement]. Now it just depends on whether it can obtain regulatory approval,” Ma wrote in a private discussion on WeChat.
However, despite it clearly taking their interest, a press officer referred Coindesk to the comments made by main 2018, which read:
“The greatness of blockchain technology depends on how it’s used. Issuing initial coin offerings or digital currencies still bear too much risks … Tencent will not issue a coin and does not consider to be involved in that.”
Whether the companies don’t want to or can’t do, remains to be seen. Currently, the banking regulations on cryptocurrencies have not been figured out and there is an outright ban, which has seen cryptocurrencies removed from Alipay and WeChat, with both companies reminding customers it is not aloud
Will WeChat and Alipay be left behind?
The big question is, does the move from Facebook propel them past the two companies and make them by far the number one messaging and payment platform? It is probably too early to say at this point but it has certainly made many Chinese analysts worried.
Xiao Lei, a prominent writer, and commentator on all things China certainly sees it in this way. He pointed out that in history often some countries or regions of the world make the step forward. Xiao claimed that China had led the way in terms of mobile payment, much in the same way the West had with Counter payments. Unfortunately, though, it appears the West will regain the lead in innovation in the upcoming digital age.
Xiao summed his argument up saying:
“What I want to say is that because we have an extremely developed mobile payment market, we do not pay enough attention to “digital currency”, just as developed countries did not pay much attention to mobile payments because of the development of counter finance.”
The feeling of being left behind or left out was reiterated by a columnist for Babbit who said poignantly, that China should be ‘worried’ about the implications of the Libra coin and that potentially, “the game between the global economic powers will be carried out in the form of digital cryptocurrency. This can be seen from Facebook’s testing in dozens of countries.”
Cai Weide was feeling similarly, saying:
“At present, foreign countries believe that the blockchain will bring huge changes and work hard for it, but the development of Chinese companies is very lagging behind…. China needs to understand that this is a major financial technology reform in the past 500 years, and China should actively participate.”
Perhaps this lack of involvement was part of the plan. Nobody knows yet if Facebook can pull off this Libra currency. With mounting regulatory pressures and numerous stern eyes looking at them, it is unknown. Perhaps it is best if Tencent and Ant Financial let Facebook pave the way, so when they make the crypto leap it can be with the knowledge of foresight.
The two companies already have a huge mobile payment service with nations outside of China also using them, like Cambodia, Hong Kong and numerous other nations in Asia. For them, the crypto jump is not worth taking.