NFT Apps Lose Space on Chinese Social Media Amid Lack of Legal Clarity

China's social media and networking platforms are beginning to restrict operations of NFT platforms. They fear losing operational permissions in the country if they allow NFT marketplaces to operate because the government of China is clamping down on all kinds of crypto-related activities. NFTs or non-fungible tokens are blockchain-based digital collectibles, most of which are sold via online marketplaces in return for cryptocurrencies. China has, in the last six months, imposed several restrictions on the crypto sector, making related activities legally punishable offences.

While there have been no official notices alerting NFT platforms about the restrictions being imposed on them, the names of many NFT platforms not working anymore in China have been mentioned by local media reports.

WeChat, which is China's equivalent to WhatsApp, has taken down popular NFT platforms off its searches. The banished platforms include Xihu No.1 and Dongyiyuandian.

On March 16, Xihu No.1 reportedly reached out to WeChat's parent company Tencent only to learn that the digital collection from Xihu No.1 currently belongs to the unopened area of the WeChat applet.

User policies have also been refreshed by Ant Group's digital collection platform ‘WhaleTalk', making over-the-counter NFT transactions a punishable offence.

NFTs play a vital role in triggering the movement of crypto assets. The sales of NFTs reached some $25 billion (roughly Rs. 1,84,700 crore) in 2021 as the speculative crypto asset exploded in popularity, data from market tracker DappRadar showed.
China, however, is staying firm on its rather conservative approach to the crypto sector despite it gaining legal statuses in countries like El Salvador and Dubai among others.

After criminalising crypto trading and mining in September 2021, China has continued to clampdown on different spheres of decentralised blockchain networks in the country.

In February, the country banned crypto-based fundraising.

China has never given a list of reasons behind its jarring approach on the crypto sector.

The country has been sniffing out illegal crypto mining centres to shut them down and hold law violators responsible.

Regions that observe more power outages are being combed to identify any crypto mining farms that may be gobbling up the electricity.