- Three Chinese financial and trade associations have issued a joint statement warning the public of the “hidden risks” of non-fungible token (NFT) investing in a Wednesday notice.
- The China Internet Finance Associations, the China Banking Association and the Securities Association of China aim to nurture innovation in the Web3 space.
- The China Banking Association went on to state that member institutions should not classify NFT assets the same way as precious metals, securities, and other financial products.
Three Chinese financial and trade associations have issued a joint statement warning the public of the “hidden risks” of non-fungible token (NFT) investing in a Wednesday notice.
The China Internet Finance Associations, the China Banking Association, and the Securities Association of China launched initiatives with the aim of encouraging innovation in the blockchain and cryptocurrency space.
The various initiatives also focus on “resolutely curb[ing] the tendency to NFT financialization and securitization”. The goal behind the NFT-focused initiatives is to bring down the growing threat of NFTs being used in illicit activities.
The China Banking Association went on to state that member institutions should not classify NFT assets the same way as precious metals, securities, and other financial products.
Cryptocurrencies such as Ether (ETH), Tether (USDT), and Bitcoin (BTC) can also no longer be used for the pricing and settlement of NFT transactions. Furthermore, platforms offering NFT services should perform real-name authentication as well as abide by Anti-Money Laundering (AML) requirements.
Lastly, any compliant firms and associations are not allowed to invest in NFTs or financially support others who are doing so.
There are other measures in the proposed code of conduct which include banning centralized service providers from providing centralized NFT transactions, and restricting any activities that could weaken the tokens’ non-fungibility.
Chinese-based social media platforms, such as WeChat, have removed any advertisements or videos relating to NFT platforms earlier this year in anticipation of a government crackdown.
However, not all Chinese-based companies have followed suit. Alibaba (NYSE:BABA) Group, a Chinese multinational e-commerce firm, launched their own NFT marketplace in August 2021 that allows users to sell tokens representing licenses to copyrights.