- The document emphasised that platforms selling digital collectibles can only support legal tender.
- The document is not legally binding.
- Signatories of the agreement pledge to avoid secondary NFT marketplaces.
Leading Chinese tech companies including Tencent Holdings, Baidu, JD.com, and Ant Group have published and signed a “14-page “self-disciplined development proposal,” according to South China Morning Post (SCMP).
The proposal, published by the China Cultural Industry Association last week, states that Chinese platforms that are selling digital collectibles – China’s term for NFTs – will implement real-name authentication for people who release, buy and sell NFTs. These platforms can “only support legal tender as the denomination and settlement currency.”
The China Cultural Industry Association published a statement stating that the signatories of the agreement acknowledge the existing regulations of cryptocurrency, which is banned in China.
Drafted by private tech companies, the document is not legally binding. It urges blockchain service providers, internet culture operators and telecom business operators to obtain regulatory certifications and resist speculation in the market.
The proposal recognises the use of NFT technology “in intellectual property protection and cultural product registration” and pledges to avoid building secondary NFT marketplaces as NFTs cannot be resold for profit in China.
While the proposal calls on companies not to set up centralised secondary NFT marketplaces for anonymous trading, experts say that private transactions of digital collectibles cannot be banned as Chinese laws stipulate that the owner of the property rights can dispose of the property at any time and that “it is in fact impossible to prohibit speculation during circulation.”
“Different from most foreign platforms that apply NFT technology as financial products, domestic digital collections are more regarded as the category of digital cultural creativity,” the China Cultural Industry Association said.
He Yifan, CEO of blockchain developer Red Date Technology told SCMP that the document “is an industry-level initiative in response to an earlier one published by major financial industry associations to curb risks associated with digital assets.”
Even though cryptocurrency is banned and NFTs are restricted in China, the country’s tech giants have moved ahead with their NFT plans. Last December, JD.com joined Tencent and Alibaba in December in the NFT space while Baidu launched an NFT marketplace in March. The digital collectibles on these platforms are built on private chains that only allow purchases with Chinese yuan.
In April, the National Internet Finance Association of China, China Banking Association and the Securities Association of China issued regulations that prohibit the use of NFTs in the issuance of financial assets such as securities, insurance, loans and precious metals.
Stay up to date: