The absence of a regulatory framework and valid government policies regarding the activities of the non-fungible token platforms has caused heightened fears among some internet companies in China.
Most leading social media firms and internet enterprises have revamped their user policies to halt or restrict the operation of NFT platforms, citing the absence of government directives and the fear of an imminent crackdown from authorities.
One of the largest social media behemoths to do so is WeChat. In one of its latest moves, the social media giant has removed a handful of NFT accounts that trespassed the existing rules. One of the most talked-about NFT platforms in China, Xihu No.1, was part of the several accounts removed by WeChat.
According to local reports, another popular platform, Dongyiyuandian, also revealed that its official app on the WeChat network was also affected.
Over the past couple of months, there has been an increase in the number of fraudulent transactions involving bot trading in most NFT networks, prompting calls for immediate action.
Although there is a total ban on transactions involving cryptocurrency in China, which has been in effect since September 2021, the Chinese government allowed the NFT space to operate.
Under the crypto ban, any firm caught aiding or abetting digital currency transactions within China or collaborating with foreign crypto platforms is liable to face stiff penalties, including paying heavy fines or imprisonment.
Therefore, the latest moves by local social media firms to restrict some NFT accounts were made in line with the government’s ban on cryptocurrency, and the changes in the user agreement were geared toward avoiding the long arm of the law.
However, crypto trading and other related activities are prohibited from operating by law; the government did not show any restraint in subjecting NFT to the same treatment as it does digital tokens.
For this reason, large corporate giants like Alibaba and Tencent have filed several applications for NFT trademarks over the past year. But the rising popularity of NFT collections in the country has paved the way for illegal activities and price speculation to find their way into the digital space.
Crypto Activities are Not Allowed in China
In the past year, the Chinese authorities have carried out a country-wide crackdown on the supply and circulation of cryptocurrency in the communist nation. Governments are not in support of the decentralization of finance and see the activity of the crypto industry as a threat to the economic and monetary policy of the government.
Moreover, the government sees crypto as a clear threat to its economic stability and progress. The move to disrupt the control of the government over fund circulation necessitates the crackdown.
However, the Chinese government appears to show an interest in the Metaverse, going by the massive funding and friendly policies it has put in place for the industry to progress.
Even large local firms like Alibaba and Tencent have also shown their interest in the Metaverse.