China has had a difficult relationship with the blockchain and digital asset world over the past two years. Originally a country conducive to mining, trade, and other activities, 2021 has led to crackdowns on almost everything, mostly due to high energy consumption and a doorway. entry levied for operations disapproved by the government.
The latest in a series of crackdowns
The crackdown eventually led to a ban on all cryptocurrency mining in China, with many miners moving to neighboring countries, Kazakhstan and Iran in particular.
Both of these nations took advantage of the situation and facilitated newly established crypto trading efforts, albeit with some restrictions.
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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 more than 1.1 billion users – decided to ban any content purporting to promote digital assets.
WeChat’s shift in policy towards the crypto world was brought to light by Hong Kong-based journalist Colin Wu.
WeChat, with over 1.1 billion daily active users in China, has updated its rules: WeChat public accounts involved in issuing, trading and funding crypto and NFTs will be restricted or banned. pic.twitter.com/mzclYjFZNg
Prior to this update, NFTs were in a gray regulatory area in China. Although cryptocurrencies have already been heavily targeted by regulation, WeChat’s ToS upgrade 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 Section.”
The new ToS goes on to state that all accounts determined to be involved in “virtual currencies or digital collections” will either be shadowbanned – a practice which allows users already engaged with a certain community to remain active but removes said community from the results of search for anyone else – or terminated, depending on perceived level of ToS violation.
Although NFTs have been mostly ignored by Chinese regulators in the past, a recent report by China Times indicates that the number of such platforms in the country has increased from around 100 to more than 500 in recent years alone. 2022.
According to Wu Junjie, a researcher at the Harbin Institute of Technology, many of them are bogged down by questionable compliance procedures – in terms of property rights and compliance.
“With respect to intellectual property rights compliance, the Hangzhou Internet Court in the first national NFT case determined that digital collection platforms should undertake a higher due diligence obligation. , and launched a strict review and reporting mechanism for digital collection companies.”
The drastic increase in interest in NFTs that culminated in the aforementioned court case may have brought these assets under regulatory scrutiny, prompting WeChat to target “digital collections” alongside cryptocurrencies.
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