WeChat Bans Several Chinese Crypto Sites for ICO Promotion
WeChat, the chat app most popular in China and in particular with its cryptocurrency communities, has banned several industry sites from its platform. Tencent, which develops the app, has said the bans are related to promotion of ICO activity and will be permanent.
Subscribe to the Bitsonline YouTube channel for great videos featuring industry insiders & experts
WeChat Bans Include Well-Known Industry Sites
The banned sites are reportedly Huobi International, Binance, DPRating, and TokenClub. According to industry information portal BitKan (which was not included in the list), the bans were due to “failure to comply with regulations”.
BREAKING NEWS (CHINA): WeChat bans top blockchain & cryptocurrency platforms due to ‘failure to comply to regulations’… What implications does this have for the industry? pic.twitter.com/tJPSZ90Yyl
— BitKan (@BitKanOfficial) August 21, 2018
Similar to Western social media platform bans for “terms and conditions violations”, few specific reasons were given.
— ? (@cryptovenus) August 21, 2018
WeChat (“Weixin” in Chinese) is one of the most popular chat apps in China, and with around a billion daily active users it’s one of the world’s largest social media platforms.
It’s similar to other popular chat apps internationally which include WhatsApp, Telegram, LINE, KakaoTalk and many others. Its user base has made it a popular platform for marketers and promoters, giving them instant access to a massive audience both in China and worldwide. It remains most popular with Chinese-language speakers.
Popular With Crypto Communities
Significantly, WeChat hosts several cryptocurrency and blockchain-related chat groups and even has the ability (for China residents) to link bank accounts, send money between users, and make daily payments like subway fares at little or no cost. The latter feature has also made it popular with over-the-counter (OTC) crypto trading groups, which filled the gap left by China’s digital asset exchange ban.
Similar features in other chat apps like Facebook Messenger have struggled to gain the same level of traction, likely due to lack of bank cooperation and limited functionality.
So far, there hasn’t been any sign of WeChat’s bans going beyond the sites who received the notice. However with all things crypto and China, the industry will wait with anticipation to see if it spreads further.
Facebook, Twitter and Google (YouTube) have also similarly banned articles and advertisements related to ICO activity in the past year, with several industry media sites falling victim.
Ongoing Concerns Over ICO Investment Model
China has appeared most concerned over initial coin offerings (ICOs) and token sales, which in all countries have existed in a legally ambiguous environment, and are rife with scams and poorly-conceived business models that can be hard for the public to distinguish from legitimate blockchain projects.
China, more than most jurisdictions, has showed concerns that get-rich-quick investment schemes could damage its local economy if left unregulated. It moved to prohibit the practice completely in 2017, after it became wildly popular. Other countries, like Singapore, the U.S., Thailand, and Japan, have taken a more permissive but cautious approach, working on legal definitions to determine whether a token has utility on a network or represents a kind of equity in the company issuing them.
Many commentators have criticized the ICO/token-generation model for favoring “pump and dump” schemes, where select investors buy cheap crypto tokens and hype the price as much as possible, before cashing out as soon as sales go public. Though token sales have proved successful at raising startup capital for several new companies and projects, there’s little evidence that buying such tokens has much value as a longer-term investment.
ICOs, a.k.a. Token Generation Events (TGEs) or simply token sales, became wildly popular after Ethereum’s ERC20 standard made it possible (and relatively simple) for companies and individuals to issue their own unique crypto token, secured by a widely-used blockchain. Other smart contract-compatible blockchain platforms — including Bitcoin Cash, EOS, Cardano, and Bitcoin itself — have the ability to create similar tokens.
Will Tencent/WeChat’s move impact the crypto community? Why or why not? Let us know in the comments.
Images via Pixabay, Bitsonline