Wechat Prohibits Users From Using Cryptocurrency And NFT services

WeChat – is a Chinese-owned social networking platform that has just issued new regulations related to cryptocurrencies. The platform has more than 1.2 billion monthly active users.

Specifically, WeChat will restrict or prohibit accounts from issuing, trading, or sponsoring cryptocurrencies or NFTs. These digital assets are now considered “illegal business.”

If an account is violated, it will be required to be adjusted within a set time limit. That account may be permanently restricted or blocked by WeChat.

WeChat Embraces Precautions 

According to senior analyst Bao Linghao of Trivium research company, there are no official regulations related to NFT transactions. WeChat’s move is a preventive action to keep the company from struggling.

“Chinese managers don’t like speculation in any way, including NFT.”

WeChat itself is an application belonging to Tencent Holdings. With the number of monthly active users approaching 1.3 billion, the ban will undoubtedly impact NFT trading.

Since April last year, China’s financial institutions have been required not to use NFT in stocks, insurance, lending institutions, and precious metals.

Banking institutions are also advised not to facilitate NFT commercial transactions. This action appears to involve steps that the Chinese government will enforce on digital assets. On the other hand, broker Guosheng Securities pointed out that China will likely introduce a centralized secondary trading platform for NFT.

China and NFT

China considers that the NFT is likely to become a means of collection, both legal and illegal. Therefore, they are concerned that “underground banks” or usury will appear as well as other shadow banking activities.

The Chinese government’s strict stance also applies to cryptocurrencies, prohibiting Bitcoin and other virtual currencies as a means of trading. Not only that, the process of providing ICO and mining activities is not allowed at all.

China has its digital collection separate from the global NFT market, and the group is also designed on specific blockchains whose application is authorized by local authorities. Users can purchase digital supplies in Renminbi but are not allowed to resell them on the secondary market.

While local governments began tightening regulations regarding the use of NFTs, some giants from China had been trading NFTs abroad before. Bilibili, for example, plans to release 10,000 unique avatar collections through CryptoNatty. TikTok, a video-sharing platform owned by ByteDance, released its NFT collection last October.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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