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China has been a country that has had a tough spot on the blockchain world and digital assets over the past few years. It is inherently a country that is conducive to mining, trade and other activities, but in 2021 there has been a series of crackdowns mainly due to the issue of high energy consumption and this is also a gateway to operations that is of interest to the government.
The latest crackdown.
The crackdown eventually led to all cryptocurrency mining activities being banned in China, with many miners moving to neighboring countries, Kazakhstan and Iran in particular.
Both of these countries have taken advantage of the situation and facilitated newly formed cryptocurrency trading efforts, although there are some limitations.
Some forms of digital-related research are still underway in China, especially around CBDCs. However, in an update to ToS, WeChat – China's largest social network with more than 1.1 billion users – decided to ban all content that is supposed to promote digital assets.
This change in WeChat's new policy towards the cryptocurrency world has been found and voiced by Hong Kong-based journalist Colin Wu.
WeChat with more than 1.1 billion daily active users in China, has updated its rules: WeChat public accounts which involved in the issuance, trading and financing of crypto and NFTs will be limited function or banned. https://t.co/0I9oMrvFTp pic.twitter.com/mzclYjFZNg
— Wu Blockchain (@WuBlockchain) June 20, 2022
NFTs are also targeted.
Prior to this update, NFTs were also in the gray management area in China. While cryptocurrencies have been the target of much regulatory targeting, WeChat's ToS upgrade has specifically targeted NFTs.
"Accounts that provide services or content related to secondary transactions of digital collections will also be dealt with under this."
The new provision further states that all accounts identified as being related to "virtual currencies or digital collections" will be wiped out – a method that allows users who have joined a certain community to remain active but will remove the aforementioned community from search results for anyone else – or terminate, depending on the extent of the ToS Terms of Violation.
Although the NFT has previously been largely ignored by China's regulators, a recent Report by the China Times indicates that the number of such platforms in the country has increased from about 100 to more than 500 by 2022 alone.
According to Wu Junjie, a researcher at the Harbin Institute of Technology, many of these people are bogged down by questionable compliance procedures – related to property rights as well as compliance.
"As for intellectual property rights compliance, the Hangzhou Internet Court in its first case on NFT in the country has emphasized that digital collection platforms need to fulfill their obligations before higher inspections and has introduced a rigorous testing and reporting mechanism for digital collection businesses."
The sharp increase in interest in NFT suddenly culminating in the legal case mentioned above will likely cause those assets to be subject to regulatory scrutiny, prompting WeChat to target a "digital collection" along with cryptocurrencies as a target.
