To comply with Beijing’s rules, Huanhe will no longer make digital collectibles available to the general market.
Today marks the official end of Huanhe’s sales as Chinese regulatory scrutiny of NFTs grows.
Existing collectibles’ owners will still be free to keep, show off, or ask for a refund for their items.
As part of an industry push to restrict the secondary selling of digital artifacts, Ant Group and Tencent struck a deal in June.
Only one year after its inception, Huanhe, Tencent’s non-fungible token (NFT) platform, was rumored to be closing down.
As governmental scrutiny of NFTs in China grows, Huanhe, which distributes and mints blockchain-based digital collectibles, will formally cease sales today.
Decrement in Sales
Due in large part to Beijing’s restriction on secondary markets for digital artifacts, the one-year-old Huanhe portal has recently seen lackluster sales. In actuality, a lot of its limited editions are still available. Digital collectibles sales were discontinued last month, and the related portion of the Tencent News app was changed to “digital orders,” which only lets users review prior purchase records.
Digital collectibles will no longer be made available to the general public by Huanhe, although owners of already-existing collectibles will still be allowed to use, display, or ask for a refund for their items. The app will still be available, but only current users will be able to see, download, and distribute the NFTs that they currently possess. Exhibitions of augmented reality art are still accessible to users.
Secondary markets like OpenSea are prohibited in China, despite permission-based blockchains being permitted under official regulation.
After the central government outlawed cryptocurrency trading last year, it was stated that all digital collectibles must be purchased with yuan and that profit-making resale is entirely prohibited. However, businesses like Baidu and JD.com, as well as the Communist Youth League and the state-backed Xinhua News Agency, have all made their own NFTs available.
Chinese IT behemoths Ant Group and Tencent reached a deal in June of this year as part of a voluntary industry move to end the secondary trade of digital collectibles. While not legally enforceable, the pact also commits to user identity checks and respect for the nation’s cryptocurrency ban.
In order to regulate the usage of NFTs, three financial agencies also released a set of rules early this year. In further detail, a joint statement from the China Banking Association, China Internet Finance Association, and Securities Association of China warned the public about the dangers of investing in NFTs.
The use of NFTs to issue financial assets such as securities, insurance, loans, or precious metals is prohibited under these recommendations, and the three organizations also said that cryptocurrencies should not be used in the pricing or settlement of NFT transactions. Real-name authentication must be used by platforms, and they must adhere to AML regulations.
