Tencent News shut down NFT platform to comply with government policy

July 14, 2022 0 Comments

Tencent Holdings has terminated operation of nonfungible token (NFT) platforms in an effort to avoid regulatory scrutiny of the businesses.

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 embed within the app has been closed as a result of business restructure.

According to an official announcement, Tencent has erased the digital collections feature from its Tencent News app, replaced it with a digital order section where users can find their previous purchases.

Following the business changes, former Tencent News head Wang Shimu has been relocated to Tencent Platform & Content Group (PCG), which manages other platforms such as Magic Core, an NFT trading firm.

Magic Core is also reportedly in trouble and faces lagging sales, with many of its limited releases remaining unsold.

NFTs entered mainstream in China earlier this year, with several tech giants such as Tencent and Alibaba showing interest and even launching their own digital collectible platforms. However, with the rise in popularity, it 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 characteristic include bonds, insurance, securities previous metals or other financial assets.

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’s nonfungibility should not be weakened so as to indirectly facilitate initial coin offerings. Cryptocurrencies including Bitcoin (BTC), Ether (ETH) and stable coin Tether (USDT) should not be used for the pricing and settlement of NFT transactions.

Many online marketplace like Jingtan, which is operated by Ant Group on its consortium blockchain Antchain, used a phase “digital collectible” to describe the digital assets it issued, instead of referring it 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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