WeChat: The Chinese-owned social networking platform WeChat has just issued new rules regarding crypto assets. The platform has over 1.2 billion monthly active users.
WeChat will restrict or ban accounts that issue, trade or fund cryptocurrencies or NFTs. These digital assets are now considered “illegal business activities”.
If a violation is found from one of the accounts, then the account will be asked to correct it within a certain deadline. The account can be restricted. Or, WeChat can permanently block the account in question.
WeChat Preventive Measures
Senior analyst at research firm Trivium, Bao Linghao, said that to date, there are no formal rules related to NFT trading. WeChat’s decision is a preemptive action to keep the company out of trouble.
“Chinese regulators don’t like speculation of any kind, including NFTs,” he said.
WeChat itself is an application under Tencent Holdings. With the number of monthly active users reaching 1.3 billion users, the ban will certainly have an impact on NFT trading.
As of last April, Chinese Financial Institutions have already been asked not to use NFTs in securities, insurance, lending institutions, and precious metals.
Banking institutions are also urged not to facilitate commercial transactions related to NFTs. The action seems to be related to the measures that will be taken by the Chinese government regarding digital assets. On the other hand, brokerage firm Guosheng Securities pointed out that China is likely to introduce a centralized secondary market Platform for NFTs.
China and NFTs
China views NFTs as having the potential to become a means of collecting funds, both legally and illegally. Therefore, it is feared that “underground banks” or loan sharks will emerge, as well as shadow banking activities.
The strictness of the Chinese government also applies to crypto assets, which ban Bitcoin and other virtual currencies as a means of transaction. Also, the initial coin offering (ICO) process, as well as crypto mining activities, are strictly not allowed.
China has its own digital collection separate from the global NFT marketplace. The collection is also printed on certain blockchains whose application is permitted by the local government. The digital collection can be purchased in Yuan. However, it is not allowed to resell such collections in the secondary market.
When the local government tightened the rules regarding the use of NFTs, several Chinese giant corporations had first launched overseas NFT businesses. For example, Bilibili plans to release 10,000 unique avatar collections through CryptoNatty. TikTok, a video-sharing platform owned by ByteDance released its NFT collection in October last year.
