After diminishing the crypto expansion in the country, Chinese authorities are looking at non-fungible tokens. China’s Internet Financial Association, the China Banking Association and the China Securities Association revealed to “resolutely curb” NFTs’ speculative behavior in financial products and securitization.
By doing so, the authorities want to mitigate the risk of illegal financial activities associated with NFTs.
One year ago, two regulatory bodies out of this group have envisaged crackdowns in China to date by telling their members to cut down business with crypto companies. On the next day, a highly authorized administration body, the State Council announced a crackdown on crypto mining and trading.
The authority had given a reason behind this crackdown as a risk factor because of its hype and speculative trading.
The league of authorities put forward six behavioral principles that must be followed:
- NFTs don’t represent underlying assets like securities or precious metals.
- The non-fungibility of the tokens must not be weakened through methods like dividing them so that the distribution mechanism doesn’t change.
- Centralized trading shouldn’t be provided.
- Pricing and settlement of NFT transactions shouldn’t include cryptocurrencies
- Platforms must perform real-name authentication and anti-money laundering checks.
- Financing support for investments in NFTs shouldn’t be provided.
State media and local authorities also warned the people about NFT marketplaces.
The joint statement from authorities also advised users to have the “correct consumption concept,” avoid speculative investments into NFTs, and stay away from illegal financing activities.
While China is continuously forcing crypto to go down, many firms including government bodies have launched NFTs. Most of these token issuers are intended to keep their tokens isolated from the outer world.
Last year, Ant Group and Tencent, two of China’s biggest tech companies, renamed their NFT products to “digital collectibles,” to distance their offerings from NFTs. Earlier, a Chinese e-vehicle manufacturer, Xpeng, launched the NFT club on Alibaba’s Jingtan, renaming it ‘digital collectibles’.
Apart from this, China’s state-backed Blockchain Service Network (BSN) is also developing a Chinese NFT industry that is not linked to cryptocurrencies.
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