U.S. President Donald Trump signed an executive order on Tuesday banning the Alipay payment platform and seven other apps with links to the Chinese, saying the apps can access private information from their users.
Separately, U.S. officials are considering banning U.S. citizens from investing in Alibaba Group, an affiliate of Alipay’s parent, and Tencent Holdings, people familiar with the matter told Dow Jones. No decision has been made while agencies debate the possible effect on the markets, the sources said.
Tuesday’s executive order bans transactions using CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office and Alipay, which is the payments platform owned by Chinese billionaire Jack Ma’s Ant Group Co.
The crackdown comes ahead of China’s launch of its central bank digital currency (CBDC), which is thought to have influenced China’s own crackdown on Ant Financial and other Jack Ma companies.
In October, speaking at an event in Shanghai Ma criticized China’s financial system and its state-dominated banking sector, “We shouldn’t use the way to manage a train station to regulate an airport,” said Ma, “We cannot regulate the future with yesterday’s means.”
Since making the comments Ma has been keeping a low profile and his Ant Group initial public offering has been suspended by regulators.
Industry watchers have 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.
The launch of a CBDC is also expected to stunt Alipay’s micro-lending business and provide the unbanked with financial services, while also drawing back deposits for commercial banks.
China has been accelerating its efforts on the CBDC front and appears to be well ahead of the U.S. in developing a digital currency, according to analysts.
By going after Ant now and banning Alipay, the U.S. could be inadvertently helping the Chinese government progress with its digital currency revolution as people are left with no choice but to adopt its payments system. The justification for the order is also curious, given that all kinds of apps in the U.S. and elsewhere, whether financial or otherwise, have the power to access people’s private information.
The executive order goes into effect in 45 days and states that the apps are forbidden because they pose a threat to U.S. national security.