China’s Tencent Holdings is preparing to close down its year-old non-fungible token (NFT) platform, an apparent victim of a government ban on secondary digital collectible markets.
According to Chinese media reports, sources inside the multimedia company said Huanhe, the unit that mints and distributes NFTs, could close immediately and that trading ceased earlier this month in anticipation of a government crackdown.
NFTs on the Huanhe app were reportedly sold out this week, although the site was still letting users view the work of augemented reality artists.
Last month, Tencent and a number of other Chinese tech companies signed a pledge to stop the secondary trading of NFTs.
Cryptocurrency trading and mining are forbidden in China, although the country still allows the restricted use of NFTs and blockchains. Permission-based blockchains are allowed under government oversight, while secondary NFT markets like OpenSea are banned.
Also last month, the Chinese social media app WeChat began banning accounts associated with cryptocurrency and NFTs, barring its billion-plus users from discussing anything related to digital assets.
The platform also reportedly “shadowbanned” any public account that works with crypto. This increase in attention could have to do with the fact that NFT platforms have risen from 100 to more than 500 this year, according to statistics by China Times.
Because of the ban, digital collectibles must be purchased with yuan, and reselling for a profit is forbidden. As the South China Morning Post noted, that hasn’t kept companies and organizations from entering into the market.
“There was a spree of big companies flocking to issue digital collectibles. But the business itself is unsustainable, because the fact that they made everything an NFT and offered a huge number of copies doesn’t make the product rare any more,” said Gao Chengshi, a Web3 analyst and investor, told the newspaper.
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