China’s crypto crackdown comes for NFTs

While cryptocurrencies are being torched in China, their fellow blockchain technology, NFTs, have stayed relatively unscathed. There’s currently little regulation of digital collectibles in the country, and people can buy them freely from online marketplaces (although they must pay in renminbi, not BTC or ETH—and the tokens are built not with popular blockchains like Ethereum, but ledgers under Chinese regulators’ purview).

However, their fortunes may be turning as China looks to tighten its grip. This week, Tencent, the domestic tech giant behind the country’s ubiquitous social app WeChat, froze several accounts on the app that were linked to NFTs. According to a statement from the company, this was to “rectify” public profiles in order to “combat speculation in virtual currency transactions.”

An official account from WeChat, on China’s social website Weibo, posted Wednesday that Tencent-verified profiles on its platform can display NFTs, but cannot facilitate secondary-market sales (which are restricted by China’s Cyberspace Administration). Similarly, so-called mini programs on WeChat can support NFTs sales only as “gifts within the primary market,” and only in collaboration with blockchains registered with the cyberspace agency.

According to the South China Morning Post, at least a dozen WeChat public profiles used to publish content for followers were reined in, although the one for Tencent’s own NFT trading venture, Magic Core, was left alone. Some were reportedly accused of fraud. Others must now submit certificates of cooperation with state-approved blockchain enterprises, which could presumably lift their suspension—although further regulation is surely on the horizon.

As crypto has barreled into the mainstream worldwide, China has fought to keep the movement under control, arguing that virtual money is volatile and risky, and branding it the currency of fugitives and scammers. It has banned government-unsanctioned digital assets from banks and vendors, and criminalized Bitcoin mining in coal-rich regions under threat of stiff punishment.

This crackdown has also come in the midst of a broader crusade against a number of technology industries, including homegrown companies in gaming (by setting video game playtime limits for youth), social media (by deleting fandom accounts including those for K-pop group BTS), fintech (by scuttling Ant Group’s gigantic almost-IPO), and ride-hail apps (by thrashing Didi’s New York Stock Exchange listing).