According to a news report, Tencent’s WeChat intends to penalize public accounts that facilitate secondary transactions of NFTs. The new rules also target accounts that provide access and guidance for cryptocurrency trading.
Popular Chinese app imposes restrictions on NFT transactions
WeChat, the instant messaging, social media and mobile payments app developed by Chinese tech giant Tencent, is rolling out a policy update that will ban certain services related to non-fungible tokens (NFTs) and cryptocurrencies on its platform.
The South China Morning Post quoted Tencent as saying that it “will order accounts to provide relevant services or content for secondary trading of digital collectibles to rectify, and restrict some functions or even ban accounts.” The news was released in April, WeChat said. Acknowledging that some NFT-related accounts have been suspended.
The policy update will also introduce penalties for accounts that provide WeChat users with transaction channels, guidance, or issue cryptocurrencies. Accounts supporting initial coin offerings (ICOs) and crypto derivatives trading will also be affected.
With the move, WeChat management is considering guidelines issued by Chinese regulators earlier this year, suggesting that businesses in the industry should steer clear of the financial aspects of such digital assets, the report noted.
“The new rules focus on narratives that the secondary market for trading digital collectibles may trigger speculation and instability in financial markets,” said Wang Yinying, a Shanghai-based lawyer specializing in blockchain and Web3-related cases.
WeChat claims to be preemptive
The legal expert was referring to a joint statement issued in April by the China Internet Finance Association, China Banking Association and China Securities Association aimed at curbing risks associated with cryptocurrencies.
Bao Linghao, a senior analyst at research firm Trivium China, commented: “Tencent is taking pre-emptive actions to avoid getting itself into trouble.” He noted that there are no formal regulations on NFT transactions yet, but stressed that “Chinese regulators do not like any kind of Speculation, including NFTs.”
This spring, Chinese financial institutions were asked to stay away from NFTs and banned their use in various sectors including securities, insurance, loans and precious metals. Experts believe that the People’s Republic of China may establish a centralized NFT secondary trading platform.
Chinese digital collectibles are built on consortium blockchains, not open blockchains like Ethereum. In addition, guidelines issued in April suggested that purchases in yuan must be made in real identity to avoid money laundering risks.
The South China Morning Post further quoted WeChat sources as saying that accounts showing digital collectibles and primary transactions require a contract with a blockchain company certified by the China Cyberspace Administration (CAC), which does not support secondary transactions.
The blockchain, built by big tech companies such as Alibaba, Tencent, Baidu and JD.com, was one of the first to receive CAC approval in 2019, according to the Daily Mail, adding that since last year, Consumer brands and Chinese state media have jumped on the NFT bandwagon of collectibles based on such platforms.
What are your expectations for the future of NFTs in China, and what are your thoughts on the new restrictions on WeChat? Share your thoughts on the topic in the comments section below.
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