Chinese media giant, Tencent news, has ended the operation of nonfungible token (NFT) platforms in an effort to avoid regulatory scrutiny of the businesses.
Tencent suspends NFT platforms to evade the prying eyes of regulators
In its bid to stay away from the regulatory eyes of the business of crypto, Tencent Holdings had to suspend the operation of nonfungible token (NFT) platforms.
Tencent News, the Chinese social network and gaming giant’s media product, announced it would digital cease digital collectible sales starting from July 1, one of the trading platforms embedded within the app has been closed as a result of a business restructure.
According to an official announcement, Tencent has erased the digital collections feature from its Tencent News app and replace it with a digital order section where users can find their previous purchases.
The social media giant relocated its former head Wang Shimu to Tencent Platform & Content Group (PCG), which manages other platforms such as Magic Core, an NFT trading firm, following the business changes.
Magic Core is also reportedly in trouble and faces lagging sales, with many of its limited releases remaining unsold.
Chinese government wary of frauds and risks associated with NFTs
NFTs entered the mainstream in China earlier this year, with several tech giants such as Tencent and Alibaba showing interest and launching their own digital collectible platforms. However, the rise in popularity, also raised attention from the government, which has warned investors to be wary of frauds and risks associated with these NFTs.
Earlier this month, Tencent signed an agreement document stating that it would stop the secondary trading of digital collectibles. Other Chinese tech giants such as JD.com, Baidu, and Ant Group also made the pledge.
The move follows three industry bodies jointly issued guidelines to prevent the NFT market from overheating.
In April, The China Banking Association, the China Internet Finance Association, and the Securities Association of China issued a joint initiative aimed at encouraging innovation and applications in NFTs that can promote digitalization of the cultural industries as well as resolutely curb the tendency of NFT financialization and securitization to reduce the risks around illicit activities.
The China Banking Association said institutions should not create NFTs whose underlying characteristics include bonds, insurance, securities precious metals, or other financial assets.
Other social media giants remove accounts associated with NFTs
The rise in the number of illegal transactions and bot purchases for NFTs has prompted tech giants to take precautionary measures. Chinese social media giants such as Weibo and Tencent’s WeChat started removing accounts associated with digital collectible platforms.
Chinese regulators stated that NFT creators should not weaken their nonfungibility should so as to facilitate initial coin offerings indirectly. They further barred people from pricing and settling NFT transactions using cryptocurrencies including Bitcoin (BTC), Ether (ETH), and stablecoin Tether (USDT).
Many online marketplaces like Jingtan, operated by Ant Group on its consortium blockchain Antchain, used a phase “digital collectible” to describe the digital assets it issued, instead of referring to them as non-fungible tokens (NFTs) in an attempt to align with the government’s increasing scrutiny of any speculative activities related to crypto.
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