Tencent Follows Through With Plans, Stops NFT Sales on Huanhe Platform
Less than one month after an initial announcement, Chinese internet giant, Tencent Holdings eventually stopped the sale of digital collectibles on its platform and marketplace, Huanhe.
In a previous article, we reported about the plans of Tencent to shut down its NFT marketplace due to the effect of regulatory complications. Such regulations which prohibited secondary sales of digital collectibles, among other rules guiding the industry made the business largely unprofitable for the company. Hence, having been in existence for just about one year, Tencent has finally closed that aspect of its business.
What is described as digital collectibles in China is more popularly known as NFTs in other parts of the world. It is a phenomenon that became popular in the art world around 2020. The proliferation of NFTs coincided with the growth of remote operations as the world adapted to the realities of the Covid-19 pandemic. During the period, there was increased global awareness around online operations like DeFi and NFTs. The overall cryptocurrency market also experienced a surge within the same period which led to the most recent bull run.
Things began to turn around when the Chinese government went all out on cryptocurrency, clamping down on the industry and releasing stringent conditions to guide those areas that were allowed to operate. One such area is the NFT sector, which operated under a new nomenclature, digital collectibles, still under tight conditions, which included the abolishment of secondary sales by users.
As mentioned above, these conditions have forced Tencent to close its marketplace for digital collectibles. According to reports, from Tuesday, August 16, 2022, Hunahe, Tencent’s marketplace will no longer issue digital collectibles. The company has also announced via the Huanhe app that users will be offered refunds on their digital collectibles based on request. Any returned digital collectibles will be destroyed by the company, as it claims that the essence of this whole process is to allow it to focus on more strategic businesses.
Although Tencent is stopping the issuance of new digital collectibles, the Huanhe App will remain active. It will serve users who would like to display, download and share digital collectibles that they already own. None of the above-mentioned processes goes against the current regulations in China, not even when the platform was fully functional. As stated by Tencent, Huanhe users could only buy new digital collectibles using fiat currency and transfer them to third parties for non-profit purposes.
This move by Tencent has added another twist to the development of the digital asset industry in China. Tencent and Alibaba, among other companies, have led the race in the development of the digital assets industry in China. So far, both companies have been the beacon for others who ventured into the digital space within the region. In terms of regulations, these two have also led the way in ensuring compliance, while substantive frameworks are being expected from the government. Tencent’s withdrawal could send a panic wave and redefine the sentiments in the digital industry across China, especially with regulatory conditions being fingered as a concern.
China’s ban on the cryptocurrency industry has been well documented, especially with the forceful approach initiated in 2021. The impact of this ban has also been felt across the global cryptocurrency industry. In many quarters, this ban and the events that followed are quoted as the main catalyst for the bear market which has seen the cryptocurrency market lose a huge part of its overall value.
Tencent’s exit from the digital collectible sector is an independent action by the company. How other stakeholders would react to it is not known yet. However, it does not affect other areas of the digital assets industry, even those where the company is still participating, like the Metaverse. Other big names in the industry such as Baidu and JD.com are still active in the space. Even state-backed Xinhua News Agency and the Communist Youth League, have both offered their digital collectibles.