A Working Group from the Fujian Province of China has released a memo to address the growing rate of NFT participation among the citizens of the region. This memo, which has been circulating across various social media platforms, is regarded as a “Reminder Letter” to reiterate the stands of the Chinese government over NFT proliferation in the country.

Despite various attempts by the Chinese government to quell the expansion of the NFT industry within its region, more people are noticed to be joining the industry. The concept of NFTs and the participation in transactions involving the digital element continues to grow in popularity. To this effect, the regulatory agencies across different regions of the country are stepping up their actions in tackling this development.

It has been observed that several platforms have chosen to ignore the multiple warnings of the government by not just engaging in unauthorized secondary transactions of NFTs, but are also encouraging new users to take part in the show. This is seen as a move to encourage more speculation in the NFT digital marketplace, something the Chinese government has vehemently frowned upon.

Those involved in this propagation of secondary market participation in NFTs are taking advantage of the current state of the NFT market, which is seen to be largely immature in China. As a result, adequate supervision is lacking and people are operating without properly defined regulatory frameworks. The consequence of this situation is that as more people participate, the risks affecting the stability of the market also continue to increase.

As mentioned above, a “Reminder Letter from the Working Group of Fujian Province to Clean Up and Rectify Various Trading Venues on Preventing the Risk of NFT Violations” has been released. The document, which has circulated among social media platforms in the region addresses key issues surrounding the NFT marketplace in its current state. A paramount condition contained in the document prevents trading platforms from participating in NFT activities. Such participation would henceforth be considered a violation of regulatory risks.

The authenticity of the “Reminder Letter” was confirmed by a spokesperson of the Fujian Provincial-Local Financial Supervision and Administration.

The spokesperson said;

The document requires that trading venues in Fujian Province shall not carry out NFT transaction-related activities. However, many NFT platforms in the market do not belong to the category of trading venues referred to in this article.

From the comments of the spokesperson, and the content of the “Reminder Letter”, it can be inferred that the essence of the letter from the Working Group of the Fujian Province is to clean up and rectify the various trading platforms in the region. The document noted the recent unprecedented increase in the number of NFT products in the region. Considering the association of NFTs with illegal activities like fraud, speculation, and money laundering, this surge is posing a lot of risks in the region’s financial system.

As a result, the Fujian Province is creating a condition where no trading platform can indulge in the trading of NFTs without proper approval. The “Reminder Letter” further tasked trading platforms to guide customers in establishing correct trading concepts. They were also mandated to consciously resist speculation of any kind and to prevent the price of trading products from being inflated and deviating from the law of value. If relevant illegal activities are found, the platforms are mandated to promptly report to the relevant departments.