China is limiting its digital asset market even further as officials fear that criminals are using the sector.
Three industry organizations in China have jointly released rules days after a Chinese media source called for swift monitoring of digital collectibles.
On Wednesday, China’s government-run organizations, the National Internet Finance Association of the country, the Banking Association, and the Securities Association issued warnings to financial institutions against enabling ‘illegal’ NFT trading.
Last year, these government-backed organizations took a tough stance against the Chinese cryptocurrency sector. China then outlawed initial coin offerings, bitcoin mining, and cryptocurrency transactions.
China’s NFT market is getting pretty popular
NFTs are ownership certificates for a one-of-a-kind digital property, such as a video, song, or artwork. Digital artifacts are gaining hold in China, and tech giants such as Ant Group and Tencent Holdings have welcomed them.
Although NFTs might help China’s digital economy, the trio warned that they could also lead to speculative trading, money laundering, and illicit financing. Last year, the trio also declared a combined ban on cryptocurrency trading.
The statement, which was published on the country’s Banking Association’s website, stated that NFTs must not be utilized to issue financial assets such as securities, insurance, loans, or precious metals.
Members of the trade groups were also prohibited from providing trading venues or financing for NFTs.
The statement states that cryptocurrencies cannot be used to price or settle NFTs, and real name identification is necessary for anti-money laundering purposes for NFT issuers, purchasers, and sellers.
Online marketplaces have been launched by Chinese technological titans such as Jack Ma’s Ant and video game maker Tencent (0700.HK), and a rising number of enterprises are researching NFTs.
Xtep International produced its first digital running shoe collection this month, while the official Xinhua news agency presented a digital media photo collection via NFTs last year.
China has yet to establish a regulatory framework to control the trade of NFTs in the nation.
Despite some of these legal difficulties, Broadcaster Shandong Television, a Chinese television network, is apparently building an NFT marketplace. Xinhua News Agency has previously made a similar declaration, highlighting government-owned media businesses’ involvement in the NFT market.