China has had a difficult relationship with the world in recent years Blockchain and the digital assets. Originally a country conducive to mining, trading, and other activities, 2021 saw crackdowns on almost everything, largely due to high energy consumption and a perceived gateway for operations frowned upon by the government.
The latest in a series of raids
The raids ultimately resulted in all cryptocurrency mining being banned in China and many miners moving to neighboring countries, particularly Kazakhstan and Iran.
Both nations took advantage of the situation and facilitated the newly formed crypto business endeavors, albeit with some caveats.
A form of digital-related research is still ongoing in China, specifically related to CBDCs. However, in an update to its ToS, WeChat – the country’s largest social network with over 1.1 billion users – has decided to ban all content believed to promote digital assets.
The change in WeChat policy towards the crypto world was exposed by Hong Kong-based journalist Colin Wu.
WeChat, with more than 1.1 billion daily active users in China, has updated its rules: WeChat public accounts involved in issuance, trading and funding of crypto and NFTs involved will be restricted or banned. https://t.co/0I9oMrvFTp pic.twitter.com/mzclYjFZNg
— Wu Blockchain (@WuBlockchain) June 20, 2022
NFTs are also being targeted
Prior to this update, NFTs in China were in a regulatory gray area. Even though cryptocurrencies were already heavily impacted by regulation, WeChat’s ToS upgrade specifically targets NFTs.
“Accounts providing services or content related to the secondary transaction of digital collections will also be treated under this Article.”
The new terms of service further state that all accounts intended for “virtual currencies or digital collections” will either be suspended — a practice that allows users who are already associated with a particular community to remain active, that community however, removed from search results for everyone else – or terminated, depending on the perceived level of violation of the Terms of Service.
Although NFTs have historically been largely ignored by Chinese regulators, a recent China Times report shows that the number of such platforms in the country has grown from around 100 to over 500 in 2022 alone.
According to Wu Junjie, a researcher at the Harbin Institute of Technology, many of them are bogged down by questionable compliance procedures—property rights and compliance alike.
“Regarding compliance with intellectual property rights, in the first domestic NFT case, the Hangzhou Internet Court has found that digital collection platforms need to adopt a higher pre-examination duty, and has introduced a strict examination and reporting mechanism for digital collection companies. “
The surge in interest in NFTs, culminating in the aforementioned legal case, may have brought these assets under regulatory scrutiny, prompting WeChat to target “digital collections” alongside cryptocurrencies.
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Source: Crypto News Deutsch