The China Banking Association, the China Internet Finance Association and the China Securities Association issued a joint statement warning the public about the “hidden risks” of investing in non-fungible tokens, or NFTs.
In a Wednesday statement, the three associations launched initiatives aimed at fostering innovation in the NFT-focused cryptocurrency and blockchain space, as well as “decisively curbing the trend towards the financialization and securitization of NFTs” to reduce risks around illicit activities. The China Banking Association said that member institutions should not consider NFTs as assets such as securities, precious metals and other financial products.
Furthermore, cryptocurrencies, such as Bitcoin (BTC), Ether (ETH) Y Tether (USDT), should not be used for pricing and settlement of NFT transactions, platforms must perform real-name authentication and follow anti-money laundering requirements, and compliant associations and companies must not invest in NFTs or provide financial support to others to do so. Other measures of the proposed code of conduct include not providing centralized transactions and not weakening the non-fungibility of tokens by “splitting ownership or batching, and carrying out funding of token issuance covertly.”
“We solemnly call on consumers to establish correct consumption concepts, increase their awareness of self-protection, consciously resist speculation and NFT speculation, be vigilant and stay away from NFT-related illegal financial activities, and effectively safeguard their own asset security,” the associations said. “If relevant illegal activities are discovered, they should be reported to the relevant departments in a timely manner.”
The associations proposed:
– NFTs shouldn’t represent financial assets like bonds, insurance, or precious metals
– NFTs shouldn’t be used to facilitate #ICOs
– members of the associations shouldn’t provide centralized exchanges for NFTs
– NFTs cannot be transacted in crypto…— China Boring Tech (@ChinaBoringTech) April 13, 2022
The associations propose:
– NFTs should not represent financial assets such as bonds, insurance or precious metals
– NFTs should not be used to facilitate ICOs
– association members should not provide centralized exchanges for NFTs
– NFTs cannot be the object of transactions in cryptocurrencies…
China-based regulatory associations have previously issued warnings to the public about cryptocurrency investments, while asking member institutions to abide by existing regulatory provisions regarding digital assets. The country officially banned crypto exchanges from providing services in 2017, but many people were able to use local bank accounts for crypto-related transactions before the People’s Bank of China began cracking down on the activity in 2021.
Some of China’s social media websites, including WeChat, have removed NFT platforms in 2022, apparently in anticipation of a government crackdown. However, the Chinese multinational e-commerce company Alibaba Group – one of the largest companies in the world with a market capitalization of USD 272 billion – launched an NFT market in August 2021 that allows users to sell tokens that represent copyright licenses. Author.
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