Wechat to Prohibit Accounts From Providing Some NFT and Crypto Services – According to a press report, Tencent’s Wechat plans to penalize public accounts that facilitate the secondary trade of NFTs. The new rule also targets accounts that provide cryptocurrency transaction channels and advice.
The Chinese internet giant Tencent’s instant messaging, social media, and mobile payment app Wechat is launching a policy update that will prohibit the offering of specific services connected to fungible tokens and cryptocurrencies on its platform.
Tencent reportedly claimed it would “ask accounts to rectify if they provide relevant services or content for secondary trade of digital collectibles, and limit some features or even ban the account” as quoted by the South China Morning Post (SCMP). The information comes after Wechat acknowledged in April that some accounts linked to NFTs had been suspended.
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Penalties for accounts that provide Wechat users transaction channels, advice, or cryptocurrency will also be added by the policy update. Accounts that support cryptocurrency derivatives transactions and initial coin offerings (ICOs) may also be affected.
According to the article, Wechat’s management is taking into consideration the recommendations made by Chinese regulators earlier this year that businesses in the sector should avoid the financial aspect of such digital assets.
“The new rule’s emphasis is on the narrative that the secondary market for exchanging digital collectibles would incur speculation and instability of the financial market,” says Wang Yinying, a Shanghai-based lawyer who specializes in blockchain and Web3-related cases.
The legal expert was making reference to a joint statement released in April by China’s National Internet Finance Association, China Banking Association, and Securities Association of China that was intended to reduce the risks connected with cryptocurrencies.
According to Bao Linghao, a senior analyst at the research firm Trivium China, “Tencent is taking proactive measures to keep itself out of trouble.” He highlighted that “Chinese regulators don’t appreciate speculation of any kind, including NFTs,” despite the fact that there are currently no explicit laws on NFT trading.
NFTs were advised to be avoided by Chinese financial institutions this spring, and their usage in a variety of industries was outlawed, including precious metals, insurance, loans, and securities. According to experts, the People’s Republic would probably create a centralized marketplace for NFT secondary trading.
Chinese digital collectibles are created on closed blockchains, not open ones like Ethereum, called consortium blockchains. In order to reduce the potential of money laundering, it was also recommended in the April guidelines that they be purchased with Chinese yuan using real identities.
Wechat further stated, according to SCMP’s citation of it, that the accounts that display digital collectibles and primary transactions would have to enter into contracts with blockchain firms recognized by the Cyberspace Administration of China (CAC) as well as refrain from supporting secondary trading.
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Among the first blockchains approved by the CAC in 2019 were those developed by major tech companies like Alibaba Group Holding, Tencent, Baidu, and JD.com. It also noted that since last year, consumer brands as well as Chinese state media have jumped on the NFT trend with collectibles based on such platforms.
