Chinese Finance Experts Raise Concerns over Facebook Libra’s Threat to the Country

Facebook has revealed the whitepaper for the much-hyped Libra coin on June 18. Upon its release, Facebook Libra coin has been trending among the top topics on social media platform Weibo (Twitter equivalent in China), with many cryptocurrency buffs and finance experts commenting and retweeting.

Bai Shuo, a former Shanghai Stock Exchange (SSE) engineer, shared his insights into the hot topic of Facebook Libra and introspected on the way Chinese tycoons develop their platform tokens, citing Tencent’s QQ coin for example.

“Libra launch is a big move with far-reaching influence in the future. Our US counterparts are doing the right thing. Chinese Internet giants also have a say in the world, some of them also have such token like QQ coin of Tencent (Chinese internet giant and developer of instant messaging software QQ), but its potential has yet to be fully explored, worried for them.”

“China doesn’t have to copy what the U.S. or Facebook is doing, but it must have a clear vision (of virtual currencies)”, he concluded.

Bai is not the only one who feels the threat of Libra. Zhou Tao, business director of innovation and technology division at Ant Financial, urged the country’s central bank to do something, citing that Libra Association includes big-name payment companies like Mastercard, PayPal, PayU (Naspers’ fintech arm), Stripe, Visa, etc.

Wang Xiaochuan, CEO of Chinese Internet search engine Sogou, also expressed his concerns about Libra on Weibo.

“It is a disruptive event… Facebook’s cryptocurrency is to make a difference with its global vision and 2.7 billion user base. This will change the world and pose a new challenge to China.” Wang said.

A professor at Beijing University of Aeronautics and Astronautics, CAI Weide, believes Libra can replace SWIFT and change the international financial procedure and order. 

“Libra has much great impact on the world than JPM Coin (the digital coin created by JP Morgan) as Facebook has a considerable user base of at least 2 billion from more than 100 countries and regions. There is no doubt Libra will replace SWIFT and change the international financial order.”

Some even predict it will further reinforce U.S. dollar’s hegemony. Yao Yongjie, president of Tunlan Investment which has invested a plurality of blockchain startups including bitcoin mining machine manufacturer Canaan, commented,

“To be honest, there’s nothing new in its whitepaper. But it is a good deed for the industry if Facebook and the U.S. can make it. Though China has many prominent crypto teams and talents, regulation pressures have dragged down the development of the industry. What a pity we have to face the dollar hegemony 2.0.”

Regulatory issues are indeed a pressing challenge any cryptocurrency cannot avoid. Hours after Facebook announced its crypto ambitions, French Finance Minister Bruno Le Maire poured cold water on the project, saying “it can’t and its must not happen”. Apparently, the high-profile cryptocurrency will be under intense pressure from global regulators.

In fact, “virtual currencies” of big-name companies have appeared in China early at the beginning of the 21st century. Designed in 2002, QQ coin, one yuan (13 cents) each, allows Tencent’s back-then 233 million regular registered users to shop for treats in its virtual world. Soon the coin appealed as a safe and more practical way to conduct small online purchases and even used to buy real-world items as neither credit cards nor mobile payment like Alipay was a commonplace back then.

Soon, before its further potential was explored, QQ coin’s rapid rise caused angst to the Chinese government for the fear of its potential use in money laundering and impact on real financial order, and thus waged a crackdown on virtual currencies like QQ coin.

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