China’s Tech Industry to Curb Secondary NFT Trading

Dozens of Chinese tech companies have pledged to stop the secondary trading of non-fungible tokens (NFTs).

As Reuters reported Thursday (June 30), citing stories in state media, the companies include major tech players like Ant Group, and Tencent Holdings, which signed the Digital Collectible Industry Self-Discipline Development Initiative.”

This project — led by the Chinese Cultural Industry Association — is aimed at stopping secondary trading and speculation in digital collectibles.

See also: Chinese Banking Agencies Issue Guidance About NFT Risks

Cryptocurrency trading and mining are banned in China, although the country still permits NFTs and blockchains, albeit with restrictions. Permission-based blockchains are allowed under government oversight, while secondary NFT markets like OpenSea are forbidden.

Earlier this year, a trio of financial bodies in China — the Internet Financial Association, the China Banking Association and the China Securities Association — put out a series of guidelines designed to control NFT use.

These guidelines include prohibitions against using NFTs to issue financial assets like securities, insurance, loans or precious metals. The three organizations also said that the pricing and settlement of NFT transactions shouldn’t include cryptocurrencies.

In addition to the ban on secondary trading, the pact signed Thursday asks the participating firms to put into place real-name authentication when selling digital collectibles to users. It also asks the companies to make sure their blockchain technologies are secure and controllable” and to take proper steps to guard user information.

Learn more: China’s WeChat Blacklists Accounts Tied to Crypto, NFTs

Earlier this week, reports emerged that the Chinese social media app WeChat had banned accounts associated with cryptocurrency and NFTs, and barred its more than 1 billion users from discussing anything connected to digital assets.

The ban comes at a time when NFT platforms are booming, increasing from 100 to over 500 this year, according to figures from the China Times.

Sign up here for daily updates on all of PYMNTS’ crypto coverage.