Chinese internet giant Tencent, the parent company of the WeChat messaging app, has said Facebook’s cryptocurrency Libra could pose a threat to existing payment systems like Alipay and WeChat Pay.
In a blockchain whitepaper the company published in Chinese, first seen by CoinDesk, Tencent noted Facebook’s cryptocurrency initiative was “bold and radical,” but added it’s also “prudent and rational.”
Tencent argues Libra could gain market share in countries that don’t have a credible fiat currency of their own, and in areas where access to basic financial infrastructure is poor. It could also threaten competitors like Chinese digital payments firms, as they couldn’t replicate the system.
Any internet company that has a relatively mature digital payment system, such as WeChat Pay and Alipay, would be threatened by the stablecoin if it is ever launched.
The Libra cryptocurrency may be being created through an initiative led by Facebook, but its governed by the Libra Association, a group of various firms that’ll help managed the network. It’s set to be backed by a basket of fiat currency and short-term U.S. Treasury bonds.
In its whitepaper Tencent added that the Libra could affect the “course of global expansion for digital payment companies, especially for those who are not in the Libra consortium.” Tencent itself has notably been staying away from cryptocurrencies in general, although China’s central bank has been working on one for the last few years.
Tencent’s social media app WeChat is reported to have over 1 billion daily active users, and its digital payments feature WeChat Pay is one of the biggest firms in the industry. Alongside it is Alipay, a mobile payments affiliate of the Alibaba Group.
Both firms have made it clear they aren’t supporting cryptocurrencies or their use through their applications, like because of the Chinese government’s ban on fiat-to-crypto trading. In a post on Weibo Tencent noted crypto trading isn’t supported via WeChat Pay, while Alipay made it clear in a reply to Binance that it doesn’t want its users to buy crypto through it.
Tencent has, however, been exploring blockchain technology by building a suite of blockchain services. The company has also warned of crypto vulnerabilities in the past.
Featured image via Unsplash.
