Tencent, Alibaba tighten platform rules on digital collectibles as NFTs remain a grey area in China
- Buyers who use specialised software to snatch up NFTs during sales, or those who engage in money laundering and fraudulent activities, will be reported to authorities
- Tencent’s super app WeChat has over the past few weeks banned several mini programs offering digital collectibles
Tencent Holdings and Alibaba Group Holding are tightening rules that apply to non-fungible tokens (NFTs) on their platforms, as Chinese tech giants take preemptive measures to avoid potential scrutiny of the tokens, which are referred to as digital collectibles in the country because NFTs still operate in a grey area.
In newly updated terms of service, Alibaba affiliate Ant Group’s NFT platform Jingtan said that it would “alert the police and hand over [details] to judicial authorities” if users are found to be organising transactions outside the platform in ways that constitute criminal activities.
Buyers who use specialised software to snatch up digital collectibles during sales, or those who engage in money laundering and fraudulent activities, will also be reported to authorities, the company said.
Alibaba, owner of the South China Morning Post, did not immediately respond to a request for comment.
Separately, all-purpose super app WeChat, operated by social and gaming giant Tencent, has over the past few weeks banned several mini programs offering digital collectibles.
Among those banned was West Lake No 1, a digital collectible mini program offered by Hangzhou-based, Shenzhen-listed silk product manufacturer Wensli. In a statement published last week, West Lake No 1 said WeChat justified the ban by saying digital collectibles were among mini program service categories that had yet to be “opened up”. It added that it was now working on releasing a separate webpage and an app.
Dongyiyuandian and TheOne.art, two other digital collectible sellers, also had their mini programs banned by WeChat during the past few weeks, for the same reason.
Tencent, which operates its own NFT platform Huanhe as a stand-alone app, did not immediately respond to a request for comment.
Beijing has so far tolerated activities around NFTs, which are data stored on a blockchain that represents a digital asset’s uniqueness and ownership, but it has repeatedly sounded alarms over bubbles and speculative risks around the assets, and Chinese companies have been treading cautiously.
Unlike elsewhere, NFTs are priced and sold in China in yuan instead of using cryptocurrencies, and platforms do not allow the tokens to be resold after they are bought.
On Alibaba’s Jingtan, buyers are allowed to transfer NFTs to other users for free provided they have held the tokens for at least 180 days. In February, after discovering that some buyers were trying to sell their NFTs privately on other platforms, Jingtan restricted the access of 56 users to the platform’s transfer function.
Both Alibaba’s Jingtan and Tencent’s Huanhe require buyers to register with their real names.