Digital wallet solutions are gaining more mainstream traction, and this industry has largely been unregulated for the most part. The Chinese government will require wallet apps to demand real-name registration Come July 1st.
Chinese Wallet Apps to Require ID
Hardly anyone will be surprised to find out the Chinese government would like to know what its citizens are doing online. Especially where the financial sector is concerned, the government wanted to ensure there is no money laundering or terrorism funding taking place.
Now that digital wallet adoption is on the rise – particularly in the mobile sector – it becomes harder for officials to keep tabs on what everybody is doing. But that situation will come to change, as wallet app providers will require users to enter their real name if they want to continue using the service. This change will go into effect on July 1, 2016.
There is fierce competition to be found in the Chinese web wallet segment, as both Alipay and WeChat Pay are among the most common payment methods. However, users of these platforms will have to link their real identity to these wallet apps, which can be done in a variety of ways. Users can either input their identity information directly, or link a domestic bank card to their account. Failure to adhere to these new guidelines will lead to restricted funds access.
Sina reported how only 51% of Chinese e-payment accounts are linked to real identities, which indicates there is still a lot of work to be done. That being said, it also remains unclear as to what type of consequences consumers would face if they do not verify their identity by July 1. Alipay has denied rumors about freezing accounts, although they may impose some limitations on what users can do. WeChat Pay mentioned how receiving money could be “restricted” without going into much detail.
It is equally possible not verifying one’s identity may not have any consequences whatsoever. Privacy advocates are also concerned about how this information would be protected and used. Some people also feel this ruling would make it easier for Internet criminals to obtain someone’s identity and use it for nefarious purposes.
Assuming these rules will be enforced, though, it is not unlikely a lot of wallet app users will start looking for alternative solutions. Despite the convenience offered by Alipay and WeChat Pay, not everyone will take a liking to the idea of linking their identity to these solutions. Bitcoin would offer them a viable solution that is not limited to usage within China either.
A Boon for Bitcoin Adoption?
Over the past few days, there has been a surge in Bitcoin trading across the Chinese exchanges. The Bitcoin price has increased by quite a margin, as China seems to be very bullish on this cryptocurrency right now. Capital control in the country is making it very difficult to move funds out through traditional finance. However, since Bitcoin is not controlled by the government or central bank, it is a way to circumvent capital control.
These proposed changes to wallet apps seem to indicate the Chinese government wants to impose even more strict capital control come July. Forcing this change may push even more users towards Bitcoin, as it is not only an alternative form of investment, but also a currency that can be used on a global scale.
It is also important to note that imposing identity verification on Bitcoin wallets is pretty much impossible. Web wallet services may be an exception to this rule, though, as they are run by third-party companies. However, Bitcoin users should always store funds in a wallet they completely control, such as on their computer or mobile device. In the end, Bitcoin is far more compelling compared to traditional financial solutions, and users can retain a level of privacy.
What are your thoughts on these new rules to link identities to wallet apps in China? Let us know in the comments below!
Source: Tech In Asia
Images courtesy of Alipay, Shutterstock, unisci24.com
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