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Officials from China’s Hainan province are upping the ante for non-fungible tokens (NFT) surveillance in the region. Provincial authorities say they are interested in preventing abuse of the asset class by criminal elements looking to defraud unsuspecting victims.
Regional market regulators, the Hainan Provincial Market Supervision Administration, and nine other regulatory agencies issued a memorandum notifying NFT providers to require registration with regulatory authorities before offering them to the public.
The disclosure noted that the move was designed “to promote the healthy development of the digital collections industry and effectively prevent the associated risks.” Going forward, licensing requirements have been put in place for market participants while regulators pledged to standardize the NFT market according to existing laws.
These laws include the Auction Act of the People’s Republic of China, Regulation on Administration of Market Entity Registration of the People’s Republic of China, Administrative Act for Licensing of Telecommunication Business, and Blockchain Information Services Management Regulation.
In addition, regulators have warned NFT companies to remove advertising content that misleads consumers in an effort to clean up the industry. The memo notes that players who lure consumers with “white lists” or high rewards may be treated as fraud suspects with security agencies urged to “maintain a high-pressure situation.”
Market regulators are also urging law enforcement agencies to work together to prevent incidents of copyright infringement while preventing large-scale financial risks to governments. Through the Department of Tourism, Culture, Radio, Television and Sports of Hainan Province, NFT providers are required to prioritize digital collectibles with Chinese characteristics.
State of NFTs in China
After China’s infamous virtual currency ban in 2021, the communist nation failed to draw up concise rules for NFTs in the country. Depending on the absence of strict regulation, NFT adoption continues to soar, supported by a rush of government agencies in the industry.
In December, local news outlets reported that the country was on the way to launching a national platform for trading NFTs. The platform, a collaboration between China’s state-owned Art Exhibition, Huban Digital Copyrights Ltd, and Chinese Technology Exchange, has been touted as serving as a secondary market for NFTs.
While Chinese courts have ruled that digital collectibles are protected under extant property laws, regulators continue to oppose their use in speculation.
Watch: Buzzmint: Boosting NFTs
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