What Ant Group’s massive IPO might mean for digital currency and blockchains

Quick Take

  • Ant Group, the parent company of China’s Alipay, will list its public shares in Hong Kong and Shanghai — not New York
  • The firm, formerly known as Ant Financial, has ties to China’s central bank digital currency project and has invested heavily in blockchain technology 

Ant Group, the parent of  China’s largest mobile payment company Alipay, has announced that it plans to list its public shares this year on both the Hong Kong stock exchange and the Shanghai stock exchange’s new STAR market.

But while most of the coverage has focused on the Alibaba affiliate's decision not to list on the New York Stock Exchange, the development also has implications for the future of digital currency and blockchain technology.

Formerly called Ant Financial, Ant Group is seeking a $200 billion valuation, according to Bloomberg. The dual public offering will help Ant Group “accelerate its goal of digitizing the service industry in China,” the firm said in a statement.

The decision to list on the STAR market, which has been described as China’s version of the Nasdaq, comes amid intensifying geopolitical tension between the U.S. and China. The U.S. Senate recently passed a bill, for instance, that would remove Chinese companies from U.S. stock exchanges unless they allowed regulators access to their audit records. In 2014, Alibaba, which owns 33% of Ant Group’s shares, raised $25 billion after listing its shares on the New York Stock Exchange.

The move also comes in the wake of a controversial new Hong Kong national security law, which China passed late last month. Critics have said the law will undermine Hong Kong’s autonomy, but Ant's planned listing suggests that companies still see Hong Kong as an attractive market. 

Geopolitics aside, though, Ant Group's IPO is also relevant to digital currency and blockchain development.

Alipay is already a ubiquitous mobile payment platform in China, where the use of cash has fallen dramatically in the past several years. But the platform and its main competitor in China, Tencent's WeChat Pay, are also expected to play a role in the distribution of China’s forthcoming central bank digital currency.

As The Block has reported, Tencent and Alipay are both working on projects related to the digital currency, called Digital Currency Electronic Payment, or DC/EP. According to China’s national patent office website, Alipay has filed at least five patent applications related to DC/EP.

Ant Group has also been a big investor in blockchain technology, which it has said can help form the basis of an “industrial internet” in China. The firm has developed a proprietary blockchain platform, and as of last year was already using it to track charity donations, monitor supply chains, and to facilitate cross-border payments in Asia.

Ant’s dedication to blockchain aligns with that of the Chinese government. In October, China’s president Xi Jinping called on the nation to take “leading position” in the development of blockchain technology. And that didn’t come out of the blue: the nation’s central bank has been studying the technology since 2014. 

More than 70 financial service firms in China, including every state-owned bank, are already deploying blockchain-based applications, as The Block has reported. And just last week, Beijing’s municipal government released a 145-page blueprint outlining how it plans to become a leading “blockchain hub.”

The blockchains that both Ant Group and China’s leaders have in mind are of the permissioned variety, not public networks. In January, the Cyberspace Administration of China imposed new rules on blockchain platforms: users will have to register using their real identities, and the companies running the platforms will be required to store user data and censor illegal content. 

To recap: China’s largest mobile payment provider — which is widely expected to be a distributor of its new digital currency and has already invested heavily in blockchain technology — is planning one of the largest stock offerings ever.

At the very least, this seems like a bullish indicator for the future of blockchains and digital currencies — or at least China’s version of those things.


© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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