China appears to be having a love-hate relationship with NFTs. Just yesterday, we reported how Sichuan Province is launching its own NFT platform to “encourage the music industry to actively adopt modern technology.”
However, on that same day, China was busy issuing warnings about said digital assets. Three bodies jointly issued guidelines to suppress the appetite of NFTs in China.
“In recent years, China’s NFT market is getting increasingly hot,” China’s banking, securities and internet finance associations said in a joint statement.
The trio warned that NFTs could lead to speculative trading, money laundering and illegal financing, despite contributing to China’s digital economy.
Financial assets including securities, insurance, loans and precious metals must not be purchased through NFTs, the group added.
The message echoes Beijing’s initial cautious stance on NFTs. Concerned that NFTs could “easily become money-laundering tools,” Chinese state officials believe there may be a need to regulate these sectors in the same manner it polices crypto assets.
Nonetheless, China has flirted with the idea of having its own NFT market. Unlike NFT markets around the world, holders of the digital assets in China are not exposed to a secondary market.
Playing within the boundaries of the law, Tencent has enforced a blanket ban on secondary market transfers, whilst Weibo enforced internal KYC checks on its own NFT marketplace TopHolder.
State bodies have also warmed up to NFTs. China’s Ministry of Industry and Information Technology has plans to mint and sell digital assets to “spread China’s industrial culture” whilst expressing an interest in building an “industrial metaverse service platform.”
China state broadcaster Shandong Television also announced it was planning to build its own blockchain infrastructure to support NFTs whilst developing “a series of metaverse products.”