U.S. President Donald Trump signed an executive order on Tuesday banning the payment platform Alipay and seven other apps linking to the Chinese, saying the apps can access their users’ private information.
Separately, US officials are considering banning US citizens from investing in Alibaba Group, an affiliate of Alipay’s parent company, and Tencent Holdings, people familiar with the matter told Dow Jones. No decision was made while the agencies debated the possible effect on the markets, the sources said.
Tuesday’s executive order prohibits transactions using 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 before the launch of the central bank’s digital currency (CBDC) by China, which is believed to have influenced China’s crackdown on Ant Financial and other Jack Ma companies.
In October, speaking at an event in Shanghai Ma, he criticized China’s financial system and its state-dominated banking sector: “We must not use the way of running a train station to regulate an airport,” said Ma, “We cannot regulate the future with yesterday’s means. “
Since making the comments, Ma has remained discreet and his initial public offering for the Ant Group has been suspended by regulators.
Industry watchers said the People’s Bank of China is using the digital yuan as part of a broader effort to stem the growth of Alipay and WeChat Pay.
The launch of a CBDC should also hamper Alipay’s microcredit business and provide financial services to non-bankers, while withdrawing deposits for commercial banks.
China has accelerated its efforts on the CBDC front and appears to be well ahead of the US in developing a digital currency, according to analysts.
By chasing Ant now and banning Alipay, the United States may be inadvertently helping the Chinese government to progress in the digital currency revolution, as people have no choice but to adopt their payment system. The justification for the request is also curious, since all types of applications in the United States and elsewhere, whether financial or not, have the power to access people’s private information.
The executive order takes effect in 45 days and mandates that applications be banned because they pose a threat to the national security of the United States.