Chinese Banking Agencies Issue Guidance on NFTs
Three financial bodies in China issued a joint statement on Wednesday (April 13) regarding the risks associated with non-fungible tokens (NFTs), according to multiple media reports.
The guidelines released by China’s Internet Financial Association, the China Banking Association and the China Securities Association seek to reel in how NFTs are used.
The statement outlined six behavioral principles, including that NFTs must not be used in the issuance of financial assets such as securities, insurance, loans or precious metals. Other principles include that centralized trading shouldn’t be provided and that the pricing and settlement of NFT transactions shouldn’t include cryptocurrencies.
The three bodies admit in the statement that NFTs could have a contributing element to China’s economy, but strict oversight and guidelines are needed to curb speculative trading, money laundering and illegal financing.
See also: China Declares All Cryptocurrency, Related Transactions Illegal
Cryptocurrency and related transactions were banned by China’s central bank last year due to concerns over national security and social stability.
Despite China’s crypto ban, NFTs continue to be issued by major firms and even government bodies. Ant Group and Tencent renamed their NFT products “digital collectibles.”
Also banned under the new guidelines was providing trading venues or financing for NFTs. Real name authentication will also be mandated for NFT issuers, buyers and sellers, as an added measure to prevent anti-laundering, according to the statement.
Consumers are also asked to protect themselves by having the “correct consumption concept,” and regulators warned they should resist speculative investments and illegal financing activities.
Read more: China Is Building Its Own NFT Behind the Great Firewall
In January, China developed a controllable platform for digital collectibles but has only allowed the digital yuan. NFTs slipped behind China’s “Great Firewall,” but were rebranded as digital certificates. A black market for NFTs has also emerged.
Related: China Monitoring Metaverse Activity
