Summary:
- Chinese technology giants have teamed up to stop secondary trading of NFTs.
- State media reported Thursday that Baidu, JD.com and others are working on a plan to offer NFTs without infringing state laws.
- A total of 30 firms and institutes signed to the “Digital Collectible Industry Self-Discipline Development Initiative”.
Chinese technology companies Baidu, JD.com and others have teamed up to launch the “Digital Collectible Industry Self-Discipline Development Initiative”, a body dedicated to preventing secondary trading of NFTs and speculation.
According to Chinese state media, a total of 30 firms and institutes are involved in the initiative that seeks to “self-regulate” their activities in the market.
Shanghai Securities News added that the initiative is led by the Chinese Cultural Industry Association with Baidu, JD.com and others joining as signatories.
The Chinese government has outlawed crypto trading of any sort, calling it a speculative industry that is no different from gambling. However, companies still went ahead and launched NFTs and marketplaces where their customers can buy their favourite digital collectibles.
Tencent Holdings and Ant Group already have their won NFT marketplaces, while Baidu recently announced an NFT drop of 20,000 NFTs.
Others like Visual China Group, a China-based stock image agency, was reported to be testing an overseas NFT marketplace last month. Its platform would allow users outside China to pay for NFTs with ETH, which is the most popular cryptocurrency used in the industry.
Nonetheless, any thoughts of bringing the service to China are likely to be fruitless. The Chinese government may not be entirely against NFTs, but it wants the industry to operate under certain restrictions. WeChat had to ban several user accounts suspected of speculating using NFTs.
Earlier this year, the country launched the first-ever government-backed ecosystem for building blockchain projects like NFTs. Dubbed BSN (Blockchain Service Network), allowing companies to launch NFT projects in compliance with its laws.
That project has failed to gain steam since then with little progress reported. This could be why technology giants like Baidu and JD.com have joined the Chinese cultural industry to launch a self-governing initiative that will help companies to run NFT projects in compliance with the government restrictions.
The drawbacks to the concept of creating an NFT marketplace where NFT holders cannot trade their collections in the secondary market could derail the growth of the industry in China.
Looking at data from the rest of the world where secondary trading of NFTs is allowed, a lot of the transaction volume comes from secondary trading activity, where some NFTs sell for hundreds of thousands of dollars — some have gone for millions.
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