Chinese NFT industry players sign new ‘self-discipline initiative’

Big tech firms in China’s NFT space recently signed a ‘self-discipline initiative’ governing procedures in the country’s NFT sector. Major companies including JD.com, Tencent Holdings, Baidu, and digital payments platform Ant Group have already agreed to the proposal.

According to the new initiative, platforms that sell digital collectables – the common term for NFTs in China – should verify the identities of users who trade the digital assets and ‘only support legal tender as the denomination and settlement currency.’

The 14-page document was published last week by the China Cultural Industry Association, although it is not legally binding.

The initiative states not to 'contain financial assets or unlicensed financial products, including securities, insurance, credit, and precious metals, in blockchain-supported goods’ and its endorsers not to support speculation in the digital collectible market or ‘set up a centralised marketplace.’

The document also required that digital collectable platforms have relevant certifications, including those for blockchain service providers, internet culture operators, and telecom business operators.

Luo Jun, secretary-general of the metaverse committee of the China Computer Industry Association revealed that the initiative does not ‘represent the government’s stance,’ and it was introduced by the association and several other market operators.

Luo explained that although the new scheme ‘recognises NFT technology’s use in intellectual property protection and cultural product registration,’ the technology still has to be regulated to reduce financial risks.

Even though the Chinese government has banned cryptocurrencies, digital collectibles remain in a grey area regulation-wise. This has encouraged firms like Ant Group, Tencent, and JD.com to operate in the sector and launch their digital collectables platforms. Other companies like Baidu have released their digital collectibles.

On the other hand, some tech giants like WeChat have restricted the digital assets on their platform, fearing a government crackdown in the future.