Tencent shuts down NFT platform because of regulatory restrictions

Tencent shuts down NFT platform because of regulatory restrictions

China’s tech and internet giant Tencent Company has reportedly closed curtains on one of the two Non Fungible token (NFT) platforms mainly due to declining sales aided by the regressive regulatory policies of the Chinese government.

 

Tencent shut down one of its NFT platforms on 1^st July, while the other one is trying hard to remain afloat. A report from a local daily showed that the wind-down process for the same began in May. The tech giant transferred its key personnel responsible for managing the platform in the last week of May and shut down the digital collectible section from its Tencent News app by the first week of July.

 

Also Read: Crypto Exchanges Soon Could Be Forced To Block Russian Users - Kraken CEO
 

 

The catalyst for the slowdown in sales and finally closure of Tencent’s digital collectible platform is being blamed on the flawed regulatory policy that prohibits buyers from selling their NFTs in private transactions after the purchase is made, which makes these NFTs less lucrative. Further, the lack of a secondary market kills any chance of making a profit on these digital collectibles.

 

 

NFTs gained a lot of popularity in China earlier this year, with several tech leaders and big names such as Tencent and Alibaba showing interest and even launching their own NFT platforms. However, with the rise in popularity, it also got attention from the local regulatory body, which has warned investors and traders to be wary of frauds and thefts associated with these digital collectible tokens.

 

In March, multiple Chinese social media giants including Weibo and WeChat started deleting accounts associated with digital collectible platforms fearing a regulatory crackdown. In June, Alibaba launched an NFT platform but soon deleted all mentions of it from the internet due to pressure from the government.

 

Also Read: What Is A Kraken? | Kraken Exchange | How Does It Work?

 

While the Chinese government is known for its anti-Digital Currency stance where it has banned all types of digital currency transactions in the country, there is no such outright ban against digital collectible tokens and platforms. However, businesses and tech giants still dwell with attention, fearing strict actions from the Chinese government.

 

Wu Blockchain, a Chinese Twitter handle, reportedly told Cointelegraph that the investors and traders still sell their NFTs in the underground secondary markets, but large tech firms such as Alibaba and Tencent cannot afford to do so.

 

Despite a ban on Cryptocurrency Trading, mining and subsequent warning against digital collectible tokens, Chinese traders have always found a way to bypass strict government crackdowns. For example, after the cryptocurrency mining ban last year, China’s share of Bitcoin (BTC) miners dropped to zero from 60%. However, recent data suggest that China has climbed back to the second spot again, indicating miners found a way despite strict regulatory measures taken by the government. Similarly, the number of NFT platforms grew five times in four months.