By
Bhushan Akolkar
April 25th, 2024
Tencent has concerns that Facebook’s Libra success may represent a real direct threat to Chinese payment service providers.
China’s internet and communications giant Tencent has recently raised concerns that if Facebook succeeds in its Libra launch by 2020, local Chinese payment service providers like WeChat pay and Alipay would face major threats in global markets.
Tencent recently published a blockchain whitepaper in Chinese, wherein it calls Facebook’s Libra initiative as “bold and radical” as well as “prudent and rational”. The Chinese tech giant explains how Libra can quickly make inroads in markets where the local currency is not so strong or in regions that don’t have basic financial infrastructure.
This would pose a direct threat to Chinese payment services. The whitepaper reads:
“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”.
Both Tencent and Alibaba have dominated the local Chinese payments market with their respective payment services, WeChat pay and Alipay. However, neither of them are working on any blockchain-based crypto projects.
Not to forget that the Chinese government and regulators are having strict vigilance on any crypto activity in the country ever since it banned crypto assets back in 2017. However, citing the Libra competition, even the Chinese government is working on a central bank digital currency (CBDC).
The recent Tencent report looks like an indication to the Chinese government to let private organizations participate in the crypto race. With more than $400 billion in valuations, both Tencent and Alibaba have the might to take-on global players in the market.
Facebook’s Cites China’s Threat
Well, as the two economic powerhouses are engaged in a battle, both are eager to understanding its opponent’s move. Soon after the Libra announcement in June 2019, the Chinese government accelerated its CBDC development.
Facebook’s Libra head David Marcus recently warned the US lawmakers that if the Libra project is derailed, China will lead the digital payments game. It seems that the U.S. is aware of China’s CBDC plans and has already been discussing it. Recently, an official from the Federal Reserve said that the U.S. Central bank is actively considering the possibility of having a digital dollar.
The U.S. government is concerned as well that if any other currency sees a global adoption, the USD will lose its position of being the world’s global reserve currency.
The important thing is that both the major economies have acknowledged that digital currencies are here to stay, and they have no option but to embrace the ongoing transition. Thanks to Facebook’s Libra announcement which has really got the ball rolling!
However, it is important to see whether or not either of the two countries allow their private organizations to take currency-related matters to their hand. In his recent testimony, Facebook CEO Mark Zuckerberg said that his company won’t launch Libra unless the get the regulatory approval.