Their fight is mainly due to avoiding legal sanctions imposed by the Chinese government.
Alipay, one of the most used payment platforms in China, has declared itself against free sale transactions, specifying the cases of the transactions that have free-trade like digital currencies such as BTC and others.
As an effective method to be “correctly aligned” with the Chinese government regulations, Alipay explained why it decided to prohibit crypto-transactions in its platform. The company concluded that they declare against the OTC (Over – The – Counter or better known as free sale transactions).
OTCs are transactions which are made with securities that are not listed on the stock exchange. For this reason, Alipay considers them as few safe operations. Similarly, the statements of the company were also accompanied by legal arguments that justify the position against these assets.
In the public statement disclosed by the company, it is explained how the payment platform closely monitors these transactions in order to protect users and avoid legal penalties.
“Alipay closely monitors over-the-counter (OTC) transactions to identify irregular behaviors and ensure compliance with relevant regulations. If any transactions are identified as being related to Bitcoin or other virtual currencies, we will immediately stop the relevant payment services”, the statement says.
As a general measure, companies prefer to avoid transactions of this nature on their platforms, although legally, Bitcoin OTCs are not classified as illegal in the Asian country. This shows insecurity in some of the companies that decide not to operate with these assets.
The legal status of Bitcoin in that country is not clearly defined, despite the fact that last May, the Chinese government issued a statement where it clarifies that the law which prohibits the use of ICOs and their marketing does not affect the trade with BTC. In this way, bitcoins can be traded through other channels. The law approved in mid-2017 does not ban BTC.
The measure of monitoring transactions to the point of knowing what is being done using OTC turns out to be quite strict in the case of the platform. However, in this way, the company’s position regarding cryptocurrencies is constituted.
As a reason for this position that Alipay has taken, Filipe Castro, who is Co-founder and Director of information for Utrust, an instant digital payment platform, said that the Chinese government considers cryptocurrencies as chance tokens and that they do not have the intrinsic value of a real currency. He said the main problem is perception.
“Mainland China has very strict laws banning gambling, and many still see cryptocurrencies as such. Alipay and other providers still look at other cryptocurrency providers as investment outlets and not as payment vehicles. Thus, until this perception changes, it is likely that the current measures will stay in force”, Castro concluded.
However, the main reason why the platform banned the use of cryptocurrencies is due to the legal guidelines imposed by the Chinese government. Alipay fears that if for some reason these transactions are fallowed, heavy penalties can be imposed by China.
By María Rodríguez