Tencent’s Wechat plans to penalize public accounts that facilitate secondary NFT transactions, reports reveal. Accounts that provide cryptocurrency trading channels and guidance are also subject to the new rules.
Popular Chinese app imposes restrictions on NFT trading
Wechat, an instant messaging, social media, and mobile payment app developed by Chinese tech giant Tencent, has introduced a policy update that prohibits the provision of certain services related to non-fossil tokens (NFTs) and cryptocurrencies on its platform by introduced.
Quoted by the South China Morning Post (SCMP), Tencent said that it “may order rectification of accounts, limit some features, or ban accounts if they offer services or content related to secondary trading of digital collectibles.” This news comes after Wechat admitted in April that it had suspended several accounts associated with the NFT.
The policy update will also introduce penalties for accounts that offer transaction channels, guidance, or cryptocurrency issuance to Wechat users. Accounts that allow trading of initial coin offerings (ICOs) and crypto derivatives will also be affected.
The report notes that with this move, Wechat management is taking into account guidelines issued by Chinese regulators earlier this year, suggesting that companies in the industry should distance themselves from the financial aspects of such digital assets.
According to Wang Yinying, a Shanghai lawyer specializing in blockchain and Web3-related cases, “What the new rules emphasize is the narrative that the secondary market for trading digital collectibles may lead to speculation and financial market instability.”
Wechat is said to be acting preemptively
Legal experts referred to a joint statement issued in April by the China National Internet Finance Association, China Banking Association, and China Securities Association to curb risks associated with cryptocurrencies.
Bao Linghao, a senior analyst at research firm Trivium China, commented that “Tencent is acting preemptively to avoid trouble.” He noted that there are currently no formal regulations on NFT trading yet, but stressed that “Chinese regulators do not like any kind of speculation, including NFTs.”
This spring, Chinese financial institutions were asked to stay away from NFTs and were banned from using them in many areas, including securities, insurance, loans, and precious metals. Experts believe that the People’s Republic of China is likely to establish a centralized platform for NFT secondary transactions.
Chinese digital collectibles are built on consortium blockchains, not open blockchains like Ethereum. Additionally, guidelines issued in April suggest that purchases should be made using Chinese yuan under a real identity to avoid the risk of money laundering.
The SCMP further quotes Wechat as saying that accounts displaying digital collectibles or primary transactions must contract with blockchain companies certified by the China Cyberspace Administration (CAC) and refrain from supporting secondary transactions.
Blockchains built by major tech companies such as Alibaba Group Holding, Tencent, Baidu, and JD.com are among the first approved by the CAC in 2019, the daily said, adding that since last year, consumer brands and Chinese state-run media have jumped on the NFT bandwagon with collectibles based on such platforms, it added.
Image credits: Shutterstock, Pixabay, Wiki Commons, Shutterstock / Boumen Japet