China's Biggest Payment App AliPay Bans Accounts Trading Bitcoin in OTC

Alipay, the biggest payment application in China valued at $150 billion, officially banned over-the-counter Bitcoin trading, prohibiting traders from utilizing Alipay accounts to initiate digital asset trades.

The announcement of Alipay shared by Red Li, a cryptocurrency researcher and the co-founder of Chinese cryptocurrency community 8BTC, explicitly stated that users of Alipay are not allowed to use the financial network to trade Bitcoin in OTC and unregulated markets.

Alipay is blocking accounts involved in bitcoin otc trading.

To understand the decision of Alipay to ban OTC Bitcoin trades, it is necessary to acknowledge the way Alipay has dominated the Chinese payment market, garnering 90 percent of the market share.

While the Chinese government recently permitted overseas companies to operate within the local market with licenses, due to the funneling strategy used by China, Alipay already reached mass adoption, with over half of the Chinese population already using Alipay and 90 percent of mobile customers using the network as the primary payment method.

Despite the enthusiasm towards the cryptocurrency and blockchain sector, Alipay was pressured to eliminate cryptocurrency traders from its network indirectly, when the government of China asked all banks and financial service providers in February to ban Bitcoin trading accounts.

"To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,".

It is possible that a large number of traders in China have been trading Bitcoin in a peer-to-peer manner in the OTC and unregulated market, without the authorization of the government.

The statement of Alibaba shared by Li stated that individual accounts should not be used in trading Bitcoin in unregulated markets and any sign of trading will lead to the shutdown of the account.

The prohibition of Bitcoin trading by Alipay solidified the viewpoint of China towards digital asset trading, which is banned as a part of a larger initiative to strengthen capital controls.