Wechat to Prohibit Accounts From Providing Some NFT and Crypto Services

Tencent’s Wechat intends to impose penalties on public accounts facilitating secondary trading of NFTs, a press report has revealed. Accounts offering transaction channels and guidance for cryptocurrencies have also been targeted by the new rule.

Wechat, the instant messaging, social media, and mobile payment app developed by the Chinese tech giant Tencent, is introducing a policy update that will prohibit the provision of certain services related to non-fungible tokens (NFTs) and cryptocurrencies on its platform.

Quoted by the South China Morning Post (SCMP), Tencent said it will “order accounts to rectify if they provide relevant services or content for secondary trading of digital collectibles, and limit some features or even ban the account.” The news comes after in April, Wechat acknowledged it had suspended some accounts linked to NFTs.

The policy update will also introduce penalties for accounts providing transaction channels, guidance, or issuing cryptocurrencies to Wechat users. Accounts enabling initial coin offerings (ICOs) and transactions of crypto derivatives will also be affected.

The report notes that with the move, Wechat’s management is taking into account the guidelines issued by Chinese regulators earlier this year suggesting that businesses in the industry should steer clear of the financial aspect of such digital assets.

According to Wang Yinying, a Shanghai-based lawyer specializing in blockchain and Web3-related cases, “the new rule’s emphasis is on the narrative that the secondary market for trading digital collectibles might incur speculation and instability of the financial market.”

The legal expert was referring to joint statement issued by the National Internet Finance Association of China, China Banking Association, and the Securities Association of China in April aimed at curbing risks associated with cryptocurrencies.

“Tencent is acting preemptively to keep itself out of trouble,” commented Bao Linghao, a senior analyst at research firm Trivium China. He pointed out that currently there are no formal regulations on NFT trading yet, but emphasized that “Chinese regulators don’t like speculation of any kind, including NFTs.”

This spring, Chinese financial institutions were asked to stay away from NFTs, and their use in a number of areas, including securities, insurance, loans, and precious metals, was banned. Experts believe the People’s Republic is likely to establish a centralized platform for secondary trading of NFTs.

Chinese digital collectibles are built on consortium blockchains, not open blockchains such as Ethereum. Additionally, the guidelines issued in April suggested that they must be bought using the Chinese yuan under real identities to avoid money laundering risks.

SCMP further quoted Wechat as saying that the accounts which display digital collectibles and primary transactions would need to have contracts with blockchain companies certified by the Cyberspace Administration of China (CAC) and refrain from supporting secondary trading.

Blockchains built by the big tech firms like Alibaba Group Holding, Tencent, Baidu, and JD.com were among the first approved by the CAC in 2019, the daily remarked, adding that since last year, consumer brands and Chinese state media have jumped on the NFT bandwagon with collectibles based on such platforms.

What future do you expect for NFTs in China and what’s your opinion about Wechat’s new restrictions? Share your thoughts on the subject in the comments section below.