U.S. President Donald Trump on Tuesday signed an executive order banning the Alipay payment platform and seven other programs with links to the Chinese, saying the apps could access private information of their users.
Separately, U.S. officials are considering banning U.S. citizens from investing in Alibaba Group, a subsidiary of Alipay’s parent, and Tencent Holdings, Dow Jones said. No decision was made while agencies discussed the possible effects on the markets, the sources said.
Tuesday’s executive order bans transactions with CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office and Alipay, which is the payment platform owned by Chinese billionaire Jack Ma’s Ant Group Co.
The crackdown comes ahead of China’s launch of its central bank’s digital currency (CBDC), which presumably affected China’s own crackdown on Ant Financial and other Jack Ma businesses.
In October, during an event in Shanghai, Ma criticized the financial system of China and its state-owned banking sector: “We should not use the way we run a train station to regulate an airport,” Ma said. ‘We can not regulate the future by yesterday’s means. ”
Since making his remarks, Ma has maintained a low profile and his initial public offering of Ant Group has been suspended by regulators.
Industry viewers said the People’s Bank of China is using the digital yuan as part of a broader effort to curb the growth of Alipay and WeChat Pay.
It is expected that the launch of a CBDC will also hamper Alipay’s microlending business and provide financial services to the bankless, while also withdrawing deposits for commercial banks.
According to analysts, China is accelerating its efforts on the CBDC front, and it looks like it is far ahead of the US in developing a digital currency.
By now going after Ant and banning Alipay, the US could accidentally help the Chinese government progress with its digital currency revolution, as people have no choice but to adopt their payment system. The justification for the order is also strange, as all kinds of programs in the US and elsewhere, financially or otherwise, have the power to access people’s private information.
The executive order takes effect within 45 days and states that the apps are banned because they pose a threat to US national security.