Three main regulators in China have warned financial institutions against facilitating illegal NFT trading. The National Internet Finance Association of China, Securities Association of China, and the China Banking Association took a stringent stance last year to curb the Chinese crypto market. China then went on to ban crypto mining, initial coin offerings (ICOs), and cryptocurrency transactions.
The regulators highlighted risks like money laundering, speculation, and illegal financial activities associated with non-fungible tokens. The Asian country’s banking, securities, and internet finance associations have also acknowledged this. An official statement highlighted that the NFT market in China is getting “hot”. To stem its popularity, institutions have been asked to not provide a financing platform or even a centralized exchange for NFT investments.
Experts said China is yet to implement a regulatory framework that could govern NFT exchange in the country. Watchdogs pointed out that NFTs should not be used for the issuance of financial assets like securities, loans, insurance, or precious metals. They also said that cryptocurrencies like Bitcoin, Tether, and Ether should not be used for the pricing and settlement of non-fungible tokens.
Regulators highlighted the need to authenticate the real names of NFT issuers, buyers, and sellers for anti-laundering purposes. This may not affect the art market. Charles He, the China-based NFT artist, told the local Chinese media outlet that the guidelines will not have much impact on NFTs of an artistic nature for now. He believes that as long as the digital asset is not divided into shares, art NFTs are non-homogeneous. Art NFTs are far from financial products.
Despite the Chinese government’s concerns about NFTs, Broadcaster Shandong Television – a Chinese television network – is developing an NFT marketplace. State-run media Xinhua News Agency had previously made a similar announcement.