Three associations regulated by China’s central bank launch initiative to take control of NFT space in China, which excludes using top three cryptos for payment
According to Shanghai Securities News, three major government associations under the People’s Bank of China (PBOC) have launched an initiative to prevent financial risks from the non-fungible token (NFT) space.
Aside from developing the industry of digitized art, it is believed that NFT can be used for speculation, money laundering and other illegal financial activities. Therefore, the associations have suggested some strict measures to keep the NFT market under control in order to protect consumers.
China calls again for regulation of NFT space
The three organizations mentioned above are the China Internet Finance Association, the China Banking Association, and the China Securities Association. They suggested that NFT platforms in China begin to introduce several initiatives. These include adhering to integrity and innovation to support the real economy, as well as ensuring the value of NFTs is fully supported, “guiding consumers to consume in a rational manner” and to prevent the sale of NFTs at inflated prices.
Aside from that, the initiatives include protecting intellectual property rights for commodities that back non-fungible tokens, as well as to support “genuine digital cultural and creative works.” Also, all information related to NFT platforms and sales should be disclosed accurately and in full so as to protect consumers and their right to fair trade.
Prevent financial risks related to NFTs
In order to protect consumers, associations regulated by the PBOC have proposed several measures. They suggest prohibiting the inclusion of securities, credit, insurance or any financial asset, including precious metals, in the underlying commodities of NFTs. Local authorities should ensure that the above assets are not marketed as NFTs in a disguised form.
NFTs must also not be a disguised form of ICO or any other form of fundraising via token issuance.
Ban BTC, ETH, USDT for NFT payments
Another part of this initiative is to ban centralized transactions with NFTs. This includes centralized auctions, electronic matching, use of market makers, anonymous trading, standardized contract trading or any other service for NFT trading.
Three major cryptocurrencies are not recommended to be used for NFT pricing or settlement: Bitcoin, Ethereum and Tether’s stablecoin, USDT.
In addition, local Chinese authorities are required to require full name verification of NFT sellers and buyers, collect and store KYC data, and actively cooperate with any government agency that seeks to prevent or investigate money laundering activities.
