WeChat Prohibits Its Users from Using Crypto and NFT Services

WeChat: The Chinese-owned social networking platform WeChat has just issued new rules regarding crypto assets. The platform has over 1.2 billion monthly active users.

WeChat will restrict or ban accounts that issue, trade, or finance cryptocurrencies or NFTs. Such digital assets are now considered “illegal business.”

If a violation is found from one of the accounts, then the account will be asked to correct it within a certain deadline. The account can be restricted. Or, WeChat can permanently block the account in question.

Preventive Measures from WeChat

Senior Analyst of research firm Trivium, Bao Linghao, said that to date there are no formal rules related to NFT trading. WeChat’s move is a preventive action to keep the company out of trouble.

“Chinese regulators don’t like speculation of any kind, including NFTs,” he said.

WeChat itself is an application under Tencent Holdings. With the number of monthly active users reaching 1.3 billion users, the ban will certainly have an impact on NFT trading.

As of last April, Chinese Financial Institutions have already been asked not to use NFTs in securities, insurance, lending institutions, and precious metals.

Banking institutions are also urged not to facilitate NFT-related trading transactions. The action seems to be related to the steps that will be taken by the Chinese government regarding digital assets. On the other hand, brokerage Guosheng Securities pointed out that China is likely to introduce a centralized secondary trading platform for NFTs.

China and NFTs

China views NFTs as having the potential to become a means of collecting funds, both legally and illegally. Therefore, it is feared that “underground banks” or loan sharks will emerge, as well as shadow banking activities.

The Chinese government’s strictness also applies to crypto assets, which prohibit Bitcoin and other virtual currencies as a means of transaction. Not only that, the initial coin offering (ICO) process, as well as crypto mining activities, are strictly not allowed.

China has its own digital collection separate from the global NFT marketplace. The collection is also printed on certain blockchains whose application is permitted by the local government. The digital collection can be purchased in Yuan. However, it is not allowed to resell such collections in the secondary market.

When the local government tightened the rules regarding the use of NFTs, several giant companies from China had actually started NFT businesses abroad first. For example, Bilibili plans to release 10,000 unique avatar collections through CryptoNatty. TikTok, a video-sharing platform owned by ByteDance has released its NFT collection in October last year.

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