Beijing, a city within a country that has long been hostile towards crypto, is now announcing plans to develop a WeChat-like digital asset that individuals can use to pay for goods and services.
WeChat Is Causing a Lot of Disruption
It appears Facebook’s Libra is inspiring a lot of companies, nations and organizations to enter the crypto scene and develop similar plans. Libra is a new cryptocurrency set for release in 2020 that people can use to pay for goods and services through both WeChat and merchants’ websites that offer Facebook login options. The currency has excited many, while worrying several others, such as legislators and policymakers around the world.
What’s interesting is to see a country like China, which has instilled bans on crypto exchanges, digital wallets and initial coin offerings (ICOs) and which has often spoken of doing the same to digital mining operations, say it’s now looking into developing its own cryptocurrency. The asset would be issued by the People’s Bank of China (PBOC), which is the institution responsible for the banning of crypto products in the first place, and some analysts believe it’s the best organization to get the crypto movement started.
The PBOC has expressed concern that Facebook’s Libra will initiate too much competition for the bank, particularly for its cross-border payment system. Wang Xin, the director of the bank’s central research bureau, asked during a conference:
If Libra is widely used for payments… would it be able to function like money and accordingly have a large influence on monetary policy, financial stability and the international monetary system?
He seems to think so, and the bank wants to be prepared.
What’s particularly concerning is just how big Libra could be. For example, WeChat enjoys well over one billion users each year, while Facebook is more than double that size, boasting approximately 2.3 billion users on an annual basis. To put things simply, that’s a lot of people to be using a currency issued not by a country, but by an enterprise.
Some don’t seem concerned however, citing regulatory issues and currently existing payment systems already developed and being used in China that could potentially get in the way. One of these individuals is Meng Liu, an analyst with Forrester in Beijing. He comments that China’s current e-payment systems are “good enough” for widespread use and states:
Libra is unlikely to succeed since the obstacles it faces are overwhelming.
Why So Worried?
Others, unfortunately, are having a harder time putting their nerves to rest. Will Martino, founder and CEO of blockchain platform Kadena, explains:
Facebook is really trying to do this, and it involves an incredible amount of hubris. I find it all unfeasible. It looks like they are trying to declare themselves a sovereign state with their own currency… and that’s crazy.