China-based regulatory and trade associations target NFTs in latest risk notice

China-based regulatory and trade associations target NFTs in latest risk notice

China Banking Association, China Internet Finance Association, and the Securities Association of China jointly issued a statement warning the public of the “hidden dangers” of investing in nonfungible tokens or NFTs.

The three associations announced initiatives to encourage innovation in crypto and blockchain. They also stated that they would “resolutely reduce [NFT] financialization and securitization” and help reduce the risk of illicit activities. China Banking Association stated that member institutions should not be able to consider NFT assets such as precious metals and securities.

Additionally, cryptocurrency including Bitcoin (BTC), Ether(ETH), and Tether (USDT), should not be used to price and settle NFT transactions. Platforms should use real-name authentication and comply with Anti-Money Laundering requirements. Associations and firms that are in compliance should not invest or give financial support to NFTs. The proposed code of conduct also prohibits centralized transactions and does not weaken the nonfungibility of tokens “by dividing ownership, batch creation, or carrying out token financing in disguise.”

The associations urged consumers to develop correct consumption habits, increase their awareness of self-protection and resist NFT speculation and speculation. They also advised them to be vigilant and avoid NFT-related financial crimes. This will help them effectively protect their property safety. “Report any illegal activity to the appropriate departments immediately if possible.”

These associations were proposed by:
— China Boring Tech (@ChinaBoringTech) April 13, 2022

China-based regulatory bodies have issued warnings to the public regarding investments in cryptocurrency. They also called on member institutions to adhere to existing regulations concerning digital assets. Although the country has officially banned the provision of crypto exchange services, many people were still able to use local banks accounts for crypto-related transactions until the People’s Bank of China began cracking down in 2021.

Related: China’s share of Bitcoin transactions fell 80% after crackdown: PBoC

In anticipation of a crackdown by the government, some Chinese social media sites, including WeChat have taken down NFT platforms in 2022. Alibaba Group, a Chinese multinational ecommerce company, opened an NFT marketplace in August 2021. It allows users to buy tokens that represent licenses to copyrights.

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