Chinese financial and security organisations have turned their focus on the NFT sector after the country cracked down on crypto activities and deemed them illegal last year. Three groups from China have jointly warned against the financial risks that are linked to non-fungible tokens (NFTs). These organisations are, the China Banking Association, the China Internet Finance Association, and the Securities Association of China. The collective intention around NFTs from these groups is to stir transparent and honest awareness on the sales and purchases of these digital collectibles.
The Chinese organisations have said that they wish to encourage development in the blockchain tech, especially NFTs. The broader plan includes ways to tone down the tendency of “NFT financialisation and securitisation”.
Collectively, the groups have also expressed reservations towards using cryptocurrencies like Bitcoin, Ether, and Tether, to settle payments and facilitate transactions around NFTs.
In addition, the groups have also said that NFTs should not represent valuable metals and financial assets like bonds and insurance.
The main aim that these groups have in mind is to reduce the chances of NFTs to be used as tools to process illicit activities like money laundering.
The associations proposed:
– NFTs shouldn’t represent financial assets like bonds, insurance, or precious metals
– NFTs shouldn’t be used to facilitate #ICOs
– members of the associations shouldn’t provide centralized exchanges for NFTs
– NFTs cannot be transacted in crypto…— China Boring Tech (@ChinaBoringTech) April 13, 2022
While China has criminalised crypto trading and mining, classification clarity on NFTs remain awaited in the nation.
Last month, WeChat, which is China’s equivalent to WhatsApp, took down popular NFT platforms off its searches. The banished platforms include Xihu No.1 and Dongyiyuandian, among others.
User policies were also refreshed by Ant Group’s digital collection platform ‘WhaleTalk’, making over-the-counter NFT transactions a punishable offence.
NFTs, that are blockchain-built digital collectibles, play a vital role in triggering the movement of crypto assets. Their sales reached some $25 billion (roughly Rs. 1,84,700 crore) in 2021 volume as the speculative crypto asset exploded in popularity, data from market tracker DappRadar showed.