A report from the South China Morning Post says that Chinese private companies started a project to take away the anonymity of trading in non-fungible tokens (NFTs). With the “Self-Discipline Initiative,” big companies in this country promised to check the identities of digital users.
The document was signed by companies like Baidu, JD.com, Tencent Holdings, and Ant Group, which is part of Alibaba. The companies will start to “require real-name authentication of those who issue, sell, and buy” NFT and will only accept legal tender currency to settle payments.
The document is not legally binding, and the Chinese government is said not to have had any influence on it. So, it doesn’t “show how the government feels.”
In the end, these private companies said they were trying to stop Chinese people from making guesses about NFT collections and forced companies that subscribed to them to “firmly resist it.” In particular, the document says that companies that sign it will not sell tokenized products like precious metals or securities.
The companies will also need to have the right permits and certifications to do business, which can be hard for companies in China that offer blockchain services. Luo Jun, secretary-general of the China Computer Industry Association’s metaverse committee, said that the country needs to “implement more regulations.”
Digital assets and cryptocurrencies are very popular in the country. China has put limits on trading in crypto and NFTs, but Jun says the country still needs to “curb financial risks.” The report says that the document did recognize that NFT technology could change the way intellectual property and cultural products are registered.
Can China keep its people from getting into the NFT sector?
The South China Morning Post explained that this initiative, which is supposedly not influenced by the government, was agreed upon as a direct response to another initiative taken by “major financial industry associations” to reduce the risks of trading cryptocurrencies.
But China has been cracking down on the cryptocurrency business for a long time. The Asian superpower put a ban on crypto mining that won’t be lifted until 2021. This will force larger and middle-sized operations to leave the country, and the sector has been criticized all along.
China and other governments around the world say that cryptocurrencies make it easier to launder money and do other illegal things. Even though the country has tried, it hasn’t been able to stop its people from trading, buying, or selling crypto and digital assets.
Liu Jiahui, a partner at Derun Lawyers, thinks that this initiative won’t be able to stop people from trading their digital assets or speculating about them. Jiahui said:
“In China, digital collectibles are the digital versions of works of art and culture that aren’t allowed to be financial or securities products. The owner of property rights in China has the right to sell the property at any time. Traditional works of art are easier to sell than digital collectibles. It is impossible to stop people from speculating while the money is in circulation.”