China’s leading social media platforms and internet giants have updated their policy to restrict or remove nonfungible token (NFT) platforms, citing a lack of regulatory clarity and fearing government crackdown.
Chinese social media giant WeChat reportedly removed several digital collectible platform accounts for violations of the rules. Digital collection platform Xihu No.1, one of the hyped NFT projects in the market, was among the removed platforms. Another platform called Dongyiyuandian revealed that its official app has been banned, reported a local news source.
WhaleTalk, a digital collectible platform launched by tech giant Ant group, also updated its policy to increase the penalty for using an over-the-counter (OTC) desk for trading NFTs. It is important to note that even though NFTs are not necessarily banned, any form of speculative trading associated with the digital collectible derived tokens is still prohibited. An excerpt from the Google-translated report read:
“Under the background that the compliance of digital collections is not clear, many platforms have begun to actively crackdown on violations to prevent further fermentation of related behaviors.”
The rise in the number of illegal transactions and bot purchases associated with the NFT platforms has prompted several tech giants to take precautionary measures. During the blanket ban on crypto announced in September 2021, any firms found aiding crypto transactions or foreign crypto firms were held accountable. Thus, these firms’ recent actions and changes in user agreement policies seem to be done to avoid government crackdown.
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While cryptocurrencies are strictly prohibited in mainland China, the Beijing government had shown no intention of banning NFTs. This was one of the key reasons for the likes of Tencent and Alibaba to file several new NFT patents over the past year. However, the rising popularity of digital collectibles in China has also made it prone to price speculations and frauds.