Although China is not yet receptive to NFTs, the country does not seem to be interested in seeking a total ban on them soon. In reality, it has released measures intended to warn its citizens about the risks associated with blockchain technology.

Regulatory Bodies Release Guidelines

For the NFT sector, a collaborative team of Chinese regulators has released regulatory efforts to curtail the activities in the space. The organization outlined a slew of activities with which industry players should comply. While the authorities applauded the unique elements and capabilities, they also expressed concern about their dangers.

Chinese regulatory bodies such as the China Banking Association, the Securities Association of China, and the China Internet Finance Association have joined forces to launch a cooperative project to reduce the risks attached to NFTs. While appreciating the progress that blockchain tech has brought, the group expressed concern about “hidden dangers” associated with the technology.

China’s Authorities Take A Cautious Approach To NFTs

In contrast to their strong position on digital currencies and mining, the country’s regulatory organizations seem to be more amenable to NFTs, at least temporarily.

The three associations announced a joint effort on NFTs on the 13th of April, which the Chinese government supported. Despite noting that the state’s NFT marketplace has “continued to rise” and recognizes the “innovative usage of blockchain,” the governing bodies have ordered compliance with various initiatives designed to mitigate the perceived risks associated with the technology.

The first plan underlined the need to promote innovation while also urging that advancement be conducted with transparency for the economy to reap the benefits. Following that, there was a clarification of what this meant, including recommendations like the standardization of blockchain applications.

Secondly, the authorities emphasized the need to approach technology with the nature of humans in mind, like the desire to speculate and fantasize. Measures were introduced to keep the rising marketization and monetization of NFTs in check and avoid criminal activities.

In the next section, the organization outlines six standards of conduct that market players should adhere to. NFTs does not include underlying assets like securities or precious metals and therefore do not allow for fractional ownership. Furthermore, centralized trading for Non-Fungible Tokens would be prohibited. The authorities also noted that cryptocurrency should not be utilized for the bidding and payment of NFTs before they listed AML (Anti-money laundering) and KYC (know your customer) measures as criteria. 

Finally, the organization said that NFTs should not be supported financially. The organizations also urged customers to display individual risk management measures, such as refraining from wild speculation and adequately safeguarding one’s digital assets. In line with the government’s policies, WeChat, a popular social platform, recently removed NFTs from the forum.