Tencent and Alibaba Tighten NFT Rules to Avoid Regulatory Crackdown
In a move that is largely assumed to be proactive, China’s tech giants, Tencent and Alibaba have modified their NFT rules. These modifications are believed to be aimed at discouraging any moves by Chinese regulators to crack down on the emerging industry.
Top among the concerns of the tech giants is the proliferation of Non-Fungible Token (NFT) trading activities in the speculative market. This is something that the Chinese regulators have already warned against. Knowing the antecedents of the regulators, especially with activities that are related to the digital assets industry, the earlier such activities are prevented, the better for the industry.
The decisions by the tech giants have been quite expressive so far, perhaps to prove to the regulators their willingness to comply with government-approved frameworks towards the potential-laden industry. For instance, it has been reported that WeChat, a China-based multipurpose mobile app with capabilities of instant messaging, social media, and payments have removed some digital collectible platforms. The app which was developed by Tencent claimed that the removed platforms violated the policy of illegal trade.
Among the platforms removed by WeChat are Xihu N01 and Dongyiyuandian, both of which have been accused of flaunting the well-known restrictions of Chinese regulators. The non-tolerance of cryptocurrency activities by the Chinese government became well-emphasized in 2021. What started with the abolishment of Proof of Work (PoW) related mining activities which consumes a lot of energy and did not support the nation’s goal towards carbon neutrality later spread to other parts of the industry.
The People’s Bank of China (PBoC), in the latter part of 2021 placed a ban on all cryptocurrency-related activities, including all forms of trading and speculation. Unlike the bans of the previous years, enforcement was the game-changer this time around, resulting in the exodus of many practitioners in the industry. Since then, dealings around the digital assets ecosystem have been approached with utmost care.
On a global scale, the trading of NFTs is growing rapidly. Coupled with the developments around decentralized finance (DeFi) and the emerging Metaverse industry, there is an unfolding conundrum of speculative activities in the digital space. Early enough, Chinese regulators have clarified their stance at not tolerating such practices within the country. It is the knowledge of this stance that has led to players in the field adjusting their systems, making them compliant to the expected regulatory framework, even before it fully arrives.
The concerns of the authorities are clear. Their goal is to eliminate the possibility of using cryptocurrencies or any form of digital assets as a conduit for money laundering or the transfer of illicit funds. This is why the authorities insist on a properly supervised industry, where oversight activities will not be difficult to implement.
While Tencent has expressed compliance by banning users that violated the regulatory conditions on WeChat, Alibaba’s Jingtan has updated its terms of service, stating clearly that the use of bots or other specialized software to mass-purchase collectibles will be reported to the authorities. Also, users found to be organizing transactions outside the platform in a manner that could be considered criminal will be reported to the police.
From the body language of these tech giants, it is obvious that there is a deliberate intention to get things right from the beginning. This would avoid any future setbacks similar to what was experienced in the Chinese cryptocurrency market, where what used to be the global leader in the industry is practically a shadow of itself today.