Chinese IT Giants Have Pledged To Outlaw NFTs.

Leading Chinese tech firms, including Tencent, JD.com, and Ant Group, have committed to prohibit non-fungible tokens (NFTs) and crypto exchanges as part of the country’s newest wave of anti-digital asset legislation.

On June 30, China Cultural Industry Association issued the signatories’ vow to usher in new guiding suggestions to bring clarity to the NFT sector.

Although not legally obligatory, the promise acknowledges current crypto sector laws that govern the country’s blockchain-based products. The industry participants also agreed not to build secondary marketplaces to combat speculation. 

The document read:

“The specific contents include that the platform should have the corresponding qualifications according to the law, ensure the security and controllability of blockchain technology, adhere to the real-name system, strengthen the building of intellectual property protection capabilities, and resolutely resist the prevention of financial and malicious speculation, advocating rational consumption,”

It should be noted that the idea was developed by an industry association and other market participants but does not represent the official government position. According to current Chinese legislation, digital collectibles are considered a separate market from the worldwide NFT industry and are extremely illiquid.

Furthermore, the companies are not permitted to create a centralized marketplace to assist bidding, matching, or anonymous trading. However, the plans do not specify if private transactions are also prohibited.

Notably, the pledge by the tech giants follows an earlier one by the country’s top financial institutions, both of which attempted to reduce risks related with the cryptocurrency sector.

NFTs are illegal under the National Internet Finance Association of China, the China Banking Association, and the Securities Association of China, particularly for the issuance of financial products such as securities, insurance, loans, and precious metals.

Surprisingly, despite China’s strict stance on NFTs, Ant, Tencent, and JD.com have all entered the digital collectibles market. The firms launched their NFT markets on private consortium chains, where consumers could only make purchases in Chinese yuan.

The organization recognized that digital collections are gaining popularity, necessitating the implementation of risk measures.

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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Patrick

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