Chinese Associations Release Joint Statement on NFTs, Covers Guidelines

On Wednesday, a group consisting of China’s Internet Financial Association, the China Banking Association, and the China Securities Association released a statement urging the public not to turn NFTs into financial products and securities in an effort to mitigate the risks of these digital assets being used for illicit financial activities.

The country has been adamant in its position against crypto mining as well as trading, and this recent announcement on NFTs strays it further away from Web3 development. While the aforementioned associations understand the potential of these tokens for “the digitalization of industries and digital industrialization,” the group noted that the industry is likewise riddled with avenues for speculative trading, money laundering, and other illegal acts.

In the same vein, China’s Securities Regulatory Commission regarded Web3 as the next evolution of the internet, which promises to address underlying issues within the current Web 2.0 including privacy protection. Within the statement, the associations also outlined six guidelines for the growing NFT industry. These include:

• underlying assets of NFTs should not include bonds, insurance, securities, precious metals, or other financial assets;
• the nonfungibility of NFTs should not be weakened to indirectly facilitate initial coin offerings;
• centralized exchanges should not be provided for NFTs;
• NFT transactions should not include cryptocurrencies;
• real-identity authentication and money-laundering checks should be performed by platforms, and;
• financing support to NFT investments should not be provided by entities, directly or indirectly.

Amidst China’s stance against crypto and emerging technologies, major tech companies such as Bilibili, Tencent and Alibaba-affiliated Ant Group continue to offer NFTs — under the name of “digital collectibles,” to distance themselves from the market hype of such assets — through allowed blockchains. Transactions for these tokens, however, are only done through the Chinese yuan and secondary selling is prohibited unlike other prominent platforms like OpenSea.

Sources: TechCrunch, CoinDesk