Three main government associations under the People’s Bank of China (PBOC) have started an initiative to minimise financial risks associated with the non-fungible token (NFT) area.
In addition to promoting the digitised art sector, NFT is suspected of being used for speculating, money laundering, and other criminal financial operations. As a result, the trade associations have proposed some stringent restrictions to keep the NFT sector in check and protect customers.
China planning for NFT space regulation
The China Internet Finance Association, China Banking Association, and China Securities Association are the three organisations mentioned above. They propose that NFT platforms in China begin implementing a number of projects. To assist the real economy, they must adhere to integrity and innovation, as well as ensure that the value of NFTs is properly maintained, “guide customers to consume sensibly,” and avoid selling NFTs at inflated costs.
Aside from that, the objectives include safeguarding intellectual property rights for non-fungible tokens’ commodities, and supporting “real digital cultural and creative works.” In order to protect consumers and their right to fair trade, all information linked to NFT platforms and sales should be published clearly and completely.
Prevention of NFT-related risks
The PBOC-regulated groups have proposed a number of steps to protect consumers. They propose that stocks, credit, insurance, and any other financial assets, including precious metals, be excluded from the underlying commodities for NFTs. Local governments must ensure that the aforementioned assets are not disguised as NFTs and traded as such.
BTC, ETH, and USDT are prohibited for NFT payments
Another aspect of this strategy is the prohibition of centralised NFT transactions. This includes centralised bidding, electronic matching, market maker use, anonymous transactions, standardised contract transactions, and any other NFT-related services.
It is not advised that the three main cryptocurrencies be utilised for NFT pricing or settlement: Tether’s stablecoin, USDT, is a combination of Bitcoin, Ethereum, and Tether’s stablecoin, USDT.
Do you think about People’s Bank of China will be able to minimize the NFT-related risk? Comment below.
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