China’s banking association proposes a series of restrictions on NFTs in the country

The world’s most populous country China has proposed to restrict Non-Fungible Tokens (NFTs) in the country. On Wednesday 13 April, China’s banking, securities, and internet financial association announced regards to ‘curb’ the NFT-based transactions within the country.

The three governing bodies mainly, China Internet Financial Association, the China Banking Association, and the China Securities Association decided to limit the illegal financial activities related to cryptocurrencies.

Initial coin offerings (ICO) are already banned in the country. Not only this but transactions made in cryptocurrencies, and crypto mining are also banned in the country. Now, eliminating NFTs from several positive financial possibilities can certainly distance the country from Web3.0 developments. China possesses a strong economic background and the supporting structure is its 1.4 billion population. In many ways, China can be a strong market for DeFi, GameFi, and other Web3.0 products in the industry.

Also, read - Starbucks to enter in NFT business and Metaverse by end of 2022

China’s Guidelines on implementing NFTs

According to the governing bodies of China, the NFTs are certainly the building blocks of digitization in the industry but they are influenced by the financial risk, money laundering probabilities, and illicit financial activities. The association has put down some stringent rules and guidelines listed below that must be followed by the users:

• NFTs don’t represent underlying assets like securities or precious metals;
• the non-fungibility of the tokens must not be weakened through methods like dividing them so that the distribution mechanism doesn’t change:
• centralized trading shouldn’t be provided;
• Cryptocurrencies must not be included in the pricing, buying, or selling of NFTs.
• The guidelines aim to put a check on money laundering activities and therefore, real-time authentication should be followed by the platforms.
• Organizations must not provide directly or indirectly funds to invest in NFTs.

Despite the years-long tough fight against crypto, some major tech firms like Ant Group, and Tencent have managed to showcase their NFT collection by creating a permission blockchain. The permissioned blockchain works separately from open-sourced Ethereum Blockchain and the NFT collection is available to limited participants only.