The move from the Chinese tech giants is a proactive approach to be on the good side with the regulators who have been seeing many reasons to crack down on the country’s technology outfits in recent months.
Chinese multinational tech and internet giants are taking a clear stance against the proliferation of Non-Fungible Token (NFT) trading activities that may induce a government crackdown. According to local reports, WeChat, a Chinese multi-purpose instant messaging, social media, and mobile payment app developed by Tencent have removed a number of digital collectible platforms, claiming they violated the policy of illegal trade.
Xihu No.1 was amongst the digital collectibles platform that was removed by WeChat. Dongyiyuandian was also reported to have been removed by the tech giant as well.
The Chinese government has a zero-tolerance for digital currencies and made this obvious by banning all crypto-related activities last year. While the crackdown started with Proof-of-Work (PoW) related mining which consumes a lot of energy, the People’s Bank of China (PBoC) placed a ban on the financial institutions operating in the country to facilitate any transactions involving cryptocurrencies.
With the government’s stance toward crypto, China which was once a hotbed for crypto activities has now seen the exodus of startups in the space, including cryptocurrency exchanges like Huobi Global, and Binance amongst others. While investors in the country could not access cryptocurrencies any longer, most took to NFTs which has been garnering a lot of hype in recent times.
The trading activities and embrace around NFTs are soaring at an alarming rate, a trend that big tech firms believe could fuel a form of speculative trading that could make the authorities begin to crack down on the new ecosystem. Besides WeChat, Ant Group financed WhaleTalk, a digital collectible platform also updated its user agreement to increase the penalty for using an over-the-counter (OTC) desk for trading NFTs.
In reality, the Chinese government has not made any move with regards to banning NFTs the way it did crypto, however, these platforms have chosen to rather play with caution to prevent any form of costly penalty from the government later on.
Chinese Tech Giants and the NFT-Induced Fraud Scare
Authorities in Beijing typically are concerned about the chances that cryptocurrencies are prone to be used as a conduit for channeling illicit funds, or for money laundering activities. NFTs, a way to register digital ownership of assets on the blockchain has had many use cases which include tokenizing works of art.
These artworks can be priced in millions of dollars, making them even more susceptible for use as a money-laundering tool. In line with these concerns, the Chinese Regulatory Commission has issued a notice to warn of scams involving metaverse-related projects.
The move from the Chinese tech giants is a proactive approach to be on the good side with the regulators who have been seeing many reasons to crack down on the country’s technology outfits in recent months.
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