Officials from China’s Hainan province are upping the ante for non-fungible tokens (NFT) supervision in the region. The provincial authorities say they are keen on preventing misuse of the asset class by criminal elements looking to defraud unsuspecting victims.
The regional markets regulator, Hainan Provincial Market Supervision Administration, and nine other regulatory bodies released a memorandum telling NFT providers to seek registration with the authorities before offering them to the public.
The disclosure noted that the move is designed “to promote the healthy development of the digital collection industry and effectively prevent related risks.” Going forward, a licensing requirement has been in place for market participants while regulators pledge to standardize the NFT market in line with existing laws.
The laws include the Auction Law of the People’s Republic of China, Regulations on the Administration of Registration of Market Entities of the People’s Republic of China, Administrative Measures for Telecommunications Business Licensing, and the Blockchain Information Service Management Regulations, among others.
Furthermore, the regulators have warned NFT firms to eliminate advertising content that is misleading to consumers in a bid to sanitize the industry. The memo notes that players baiting consumers with “whitelists” or high rewards might be treated as fraud suspected with security agencies urged to “maintain a high-pressure crackdown situation.”
The market regulator also urged law enforcement agencies to collaborate to prevent incidences of copyright infringement while preventing large-scale financial risks to the polity. Through the Hainan Provincial Department of Tourism, Culture, Radio, Television, and Sports, NFT providers are required to give priority to digital collectibles with Chinese characteristics.
The state of NFTs in China
After China’s infamous virtual currency ban in 2021, the communist nation has failed to draw up concise rules for NFTs in the country. Hinging on the absence of stern regulations, NFT adoption has continued to soar, bolstered by the incursion of government agencies in the industry.
In December, local news outlets reported that the country was inching its way toward launching a national platform for trading NFTs. The platform, a collaboration between the state-owned Art Exhibitions China, Huban Digital Copyrights Ltd, and the Chinese Technology Exchange, has been touted to serve as a secondary market for NFTs.
While Chinese courts have ruled that digital collectibles are protected under extant property laws, regulators have continued to frown against their usage in speculation.
Watch: Buzzmint: Elevating NFTs
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