Tencent’s Wechat plans to impose penalties against public accounts that facilitate secondary trading of NFTs. This is according to a report. The new rule also targets accounts that provide guidance and transaction channels for cryptocurrencies.
Tencent’s instant messaging, social media and mobile payment app, Wechat, has introduced a policy update to prohibit certain services that are related to non-fungible tokens ( NFs) or cryptocurrencies.
South China Morning Post (SCMP) quoted Tencent as saying that it would “order accounts to correct if they provide relevant content or services for secondary trading in digital collectibles and limit some features, or even ban them.” This news comes after Wechat admitted that it had suspended accounts related to NFTs.
Accounts that provide Wechat users with transaction channels, guidance or cryptocurrencies will be subject to penalties. Accounts that enable initial coin offerings ( IICOs), and transactions of crypto derivatives, will be affected.
According to the report, Wechat’s management has taken into consideration the Chinese regulators’ earlier this year guidelines that suggested that digital assets should not be used for financial purposes.
Wang Yinying is a Shanghai-based lawyer who specializes in Web3 and blockchain-related cases. He said that “the new rule” focuses on the idea that the secondary market to trade digital collectibles could be subject to speculation and instability.
Wechat Says It Will Be Preemptively Acting
The legal expert was referring in April to a joint statement by the China Banking Association, the National Internet Finance Association of China and the Securities Association of China that aimed to reduce the risks associated with cryptocurrency.
Bao Linghao (a senior analyst at Trivium China) stated that Tencent was acting in a preemptive manner to avoid trouble. While he pointed out that there are currently no regulations for NFT trading, he stressed that Chinese regulators do not like speculation of any type, including NFTs.
Chinese financial institutions were asked this spring to refrain from NFTs. Their use in a variety of areas including insurance, securities, loans, and precious metals was also banned. Experts believe that the People’s Republic will establish a central platform for secondary trading NFTs.
Chinese digital collectibles are based on open blockchains like Ethereum, and not consortium blockchains. To avoid money laundering, the April guidelines suggested that they be purchased using the Chinese Yuan and under real identities.
SCMP also quoted Wechat saying that accounts that display digital collectibles or primary transactions should have contracts with certified blockchain companies by the Cyberspace Administration of China. They must also refrain from supporting secondary trade.
The blockchains created by big tech companies like Alibaba Group Holding and Tencent, Baidu and JD.com were approved by the CAC in 2019.