Three Chinese Industry Associations Call for NFT Regulation
Three Chinese state associations, including the National Internet Finance Association of China (NIFA), the China Banking Association and the Securities Association of China, issued a joint initiative on Wednesday for curbing the financialization and securitization of NFTs, and for preventing the risk of illegal financial activities.
The bodies pointed out that in recent years, China’s NFT market has been heating up continuously. As an innovative application of blockchain technology, NFTs show potential value in enriching the digital economy and promoting the development of cultural industries. There are, however, also potential risks, such as publicity stunts, money laundering and other illegal financial activities.
Therefore, the associations advocate that enterprises choose application scenarios reasonably, apply blockchain technology in a regulated manner, and give full play to the positive role of NFTs in promoting industrial digitalization.
The initiative involves six requirements. First, enterprises should not include financial assets such as securities, insurance, credit and precious metals in NFT commodities, or issue trade financial products in disguise. Second, enterprises should not weaken the non-homogenization characteristics of NFT by dividing ownership or creating them in batches, or by engaging in ICO (Initial Coin Offering) in disguise.
Third, enterprises should not set up trading centers in violation of regulations or provide NFT transactions with services including centralized trading, continuous listing trading or standardized contract trading. Fourth, virtual currencies such as Bitcoin, Ethereum and TEDA are not used as pricing and settlement tools for NFT issuance transactions.
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Fifth, enterprises should carry out real-name authentication for issuers, sellers and buyers, properly store customer identity information and issuance transaction records. They should also actively cooperate with anti-money laundering work. Sixth, enterprises must not directly or indirectly invest in NFTs, and must not provide financing support for investing in NFTs.