China’s financial associations propose regulations for NFT trading

China's banking association on Wednesday released a statement urging member companies to monitor the non-fungible-token (NFT) trading in the country. The association further urged the companies to not engage in NFT investment in a direct or indirect way.

In a joint statment, China’s banking, securities, and internet financial associations said, "NFTs, or the tokens used to prove the ownership and authenticity of an item, must not be used for securitisation or transacted in cryptocurrencies."

The statement added that said the decision to monitor NFT trading was made to prevent money laundering and other illegal financial activity.

Furthermore, the organisations said bonds, insurance, securities, precious metals, and other financial assets should not be included in the underlying assets of NFTs. However, the organisations in the statement do recognise the importance of NFTs that can drive the digital economy.

As per multiple media reports, in March 2022, Tencent's WeChat platform blocked over 10 public WeChat accounts that were involved in NFT trading. The firm claimed that the decision was made to curb speculation and second-hand NFT trading through WeChat accounts.

In China, NFT trading takes place via legal tender, yuan and NFT marketplaces including OpenSea , Rarible, and SuperRare are not permitted. But, in other countries, however, NFT trading is carried out through foreign exchanges that accept payments in cryptocurrencies like Bitcoin, Ethereum, and USDT.

Initial coin offerings, crypto transactions, and crypto mining have all been banned in the country. Earlier, In their NFT efforts, tech giants including Bilibili, Tencent, and Alibaba-affiliated Ant Group have collaborated with Chinese regulators to conduct NFT trading. But with the new proposed restrictions on NFT trading, the country might completely distance itself from the Web3 wave.