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The China Banking Association, the China Internet Finance Association and the China Securities Association issued a joint statement warning the public of the "potential risks" of investing in NFT.
In an announcement on Wednesday, these three associations launched initiatives aimed at encouraging innovation in the NFT-focused cryptocurrency and blockchain sectors. They also "resolutely prevent the trend of financing and securitization of NFT" to minimize the risks surrounding illegal activities. The China Bankers' Association says member institutions should not equate NFT assets with securities, rare metals and other financial products.
Furthermore, cryptocurrencies including Bitcoin (BTC), Ether (ETH) and Tether (USDT) should not be used to price and pay for NFT transactions. These platforms should carry out the real-name authentication process and comply with Anti-Money Laundering regulations, and compliant associations and companies should not invest in NFT or provide financial support to other organizations investing in NFT. Other actions in the proposed code of conduct include not providing centralized transactions and failing to undermine the irreplaceability of tokens "by dividing ownership or mass production, and implementing token issuance financing in disguise."
We strongly urge users to engage in proper consumer behaviors, to increase self-protective awareness, to be conscious against NFT speculation and speculation in general, to be vigilant and to stay away from illegal financial actions related to NFT, and protect the safety of your property," the associations said in a statement. "If illegal acts are detected, they will be reported to the relevant departments immediately."
#China's banking, internet finance and securities associations are targeting #NFTs over potential financial risks. While they recognize the contribution of NFTs to China's cultural and #DigitalEconomy, the three industry associations call for stemming the securitization of NFTs.
— China Boring Tech (@ChinaBoringTech) April 13, 2022
These China-based legislative associations have previously issued warnings to the public about investing in cryptocurrencies while at the same time calling on member organizations to comply with existing regulations on digital assets. The country has officially banned cryptocurrency exchanges since 2017, but many individuals used bank accounts for cryptocurrency transactions before the People's Bank of China strictly handled these practices in 2021.
In 2022, many websites on Chinese social networks, including WeChat, have removed NFT platforms in fear of government repression. However, Alibaba Group, China's multinational e-commerce company, one of the largest in the world with a market capital inflow of about $272 billion, launched an NFT market in August 2021, allowing users to sell tokens representing copyright licenses.
