China has had a rocky relationship with the world of blockchain and digital assets for the past several years. Originally a country conducive to mining, trading, and other activities, 2021 led to a crackdown on just about everything, primarily due to high energy consumption and a perceived gateway for government-disapproved operations.
The latest in a series of crackdowns
The crackdown eventually led to all cryptocurrency mining in China being banned, with many miners relocating to neighboring countries, notably Kazakhstan and Iran.
Both nations took advantage of the situation and facilitated the newly established crypto business efforts, albeit with some restrictions.
Some form of digital-related research is still going on in China, especially around CBDCs. However, in an update to its ToS, WeChat, the country’s largest social network with over 1.1 billion users, has decided to ban all content believed to promote digital assets.
The change in WeChat’s policy towards the world of cryptocurrencies was discovered by Hong Kong journalist Colin Wu.
WeChat, with more than 1.1 billion daily active users in China, updated its rules: WeChat public accounts involved in the issuance, trading and financing of cryptocurrencies and NFTs will have limited functions or be banned. https://t.co/0I9oMrvFTp pic.twitter.com/mzclYjFZNg
— Wu Blockchain (@WuBlockchain) June 20, 2022
NFT also target
Before this update, NFTs were in a regulatory gray area in China. Although cryptocurrencies were already a major target of regulation, WeChat’s ToS update specifically targets NFTs.
“Accounts that provide services or content related to the secondary transaction of digital collections will also be treated in accordance with this article.”
The new ToS goes on to state that all accounts determined to be involved with “virtual currencies or digital collections” will be shadow banned, a practice that allows users who are already involved with a certain community to remain active, but removes said community. community of search results for anyone. otherwise, or terminated, depending on the perceived level of violation of the Terms of Service.
Although Chinese regulators have mostly ignored NFTs in the past, a recent China Times report indicates that the number of such platforms in the country has risen from about 100 to more than 500 in 2022 alone.
According to Wu Junjie, a researcher at the Harbin Institute of Technology, many of these are bogged down by questionable compliance procedures, both in terms of proprietary rights and compliance.
“Regarding enforcement of intellectual property rights, the Hangzhou Internet Court in the first national NFT case found that digital collection platforms should bear more prior examination obligation and has launched a strict examination and reporting mechanism. for digital collection companies.
The drastic rise in interest in NFTs that culminated in the aforementioned legal case may have brought those assets under regulatory scrutiny, leading WeChat to target “digital collections” alongside cryptocurrencies.
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