Some leading Chinese tech companies, including Tencent, Ant Group, Baidu, and JD.com among others, issued a “self-disciplined development proposal” last week for the digital collectible industry (NFT sector). This will introduce real-name authentication for users that issue, buy and sell non-fungible tokens.
The self-discipline initiative will bring about identity checks for users, and adherence to China’s ban on cryptocurrencies. It will also see that no secondary marketplaces are established. This is Beijing’s effort to fight speculation finance. Platforms that sell NFTs require real-name authentication of those who issue, sell and buy the assets. It only supports legal tender as the denomination and settlement currency.
The agreement prompts tech companies (signatories) to firmly resist speculation in the market. It highlights that digital collectible platforms should have relevant certifications, including those required for blockchain service providers, internet culture operators, and telecom business operators. It recognizes the use of NFT technology in intellectual property protection and cultural product registration.
Luo Jun, secretary-general of the metaverse committee of the China Computer Industry Association, highlighted that cryptocurrency is banned in China so there is no need for further regulation to curb financial risks. He Yifan, CEO of Red Date Technology, explained that the new initiative has been formed by the industrial association and multiple market operators but does not represent the government’s stance. Yifan said the industry-level initiative was in response to an earlier document published by major financial industry associations to curb risks associated with digital assets.
The National Internet Finance Association of China, China Banking Association, and the Securities Association of China, in the month of April, issued a statement to prohibit the use of NFTs in the issuance of financial assets like securities, insurance, loans, and precious metals. He said they want to prevent the financialization of digital collectibles.
Liu Jiahui, a partner at Beijing-based Derun Lawyers, outlined that digital collectibles in China are the digital assets of art and cultural works. They aren’t entitled to be financial or securities products – thus no need for a centralized marketplace. He said the owner of property rights, according to Chinese laws, can dispose of the property at any time. Liu pointed out that digital collectibles have higher liquidity than traditional artworks, as such its impossible to prohibit speculation during circulation.