Tencent, the parent company of Chinese messaging giant WeChat Pay, admitted that the release of Facebook’s proposed digital currency would be a threat to existing payment networks.
The Chinese internet giant acknowledged the threat in a blockchain whitepaper released this week. The company warned that if Libra is released successfully, it will disrupt not only traditional financial institutions but also internet companies with established payment networks.
London Summit 2019 Launches the Latest Era in FX and Fintech – Join Now
“If Libra successfully launches, it will undoubtedly significantly bring an impact on the global payment space, and the entire financial industry around the world. It will drive the industry’s innovation and development in user experience, service cost, technology, and business model, it will also lead to further industry reshuffle,” the whitepaper stated.
Bringing payments features to existing users
With Libra, the social media company is trying to capture the payment transfer market in developing countries. Facebook will also leverage its 1.7 billion existing users to beat its competition in the payments industry.
Meanwhile, two Chinese payments giants – WeChat and AliPay – are hostile towards the cryptocurrencies. They blocked exchanges from opening fiat payments using their gateways.
Libra, however, is facing a massive backlash from the world regulators upon threatening the existing sovereign monetary system. In recent testimony before the Congress in the United States, Mark Zuckerberg revealed that the company is trying to build a payment ecosystem, not competing with central bank-issued fiats.
Amid Facebook’s jump into the crypto sector, the Chinese central bank also started to develop its own digital currency. An official from the central bank earlier revealed that the central bank-backed crypto is very similar to Libra but more centralized.
Zuckerberg also warned Congress that if Facebook fails to introduce its cryptocurrency, China will push to capture the markets with its official cryptocurrency.