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Tencent to shut down Chinese NFT platform Huanhe a year after launch, report says, amid declining market

  • China’s ban on secondary trading of digital collectibles has killed the platform’s business potential, local media reported
  • Tencent has been forced to take strict measures to curb NFT reselling, and its business group that includes Huanhe was the hardest hit in recent lay-offs

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Tencent Holdings could shut down its non-fungible token platform Huanhe as soon as this week, Chinese media reported, ending its foray into the market that started just last year amid increasing interest in the digital assets. Photo: Shutterstock
Coco Feng
Chinese social media giant Tencent Holdings plans to shut down its non-fungible token (NFT) platform, which launched just one year ago, as Beijing’s strict ban on secondary markets for digital collectibles has largely killed its business potential, according to a report by Chinese media outlet Jiemian on Wednesday.
The report, which quoted unidentified sources from Tencent, said that Huanhe, the unit that mints and distributes blockchain-based digital collectibles, will close as soon as this week.

Tencent did not immediately respond to requests for comment.

If the platform is shut down, it would mark a major retreat by Tencent from the NFT market, which has been under tight scrutiny from Beijing since growing fervour last year ignited a race to develop new trading platforms.

On the Huanhe app, all NFTs currently show “sold out”, but users can still visit augmented reality art exhibitions. A report from state-owned media Yicai Global, also citing an unnamed source at Tencent, said trading halted at the beginning of the month in anticipation of a crackdown.

Technology giants including Tencent and Alibaba Group Holding, owner of the South China Morning Post, have tread carefully with their NFT platforms in mainland China. Most domestic platforms eschew the NFT label altogether, favouring “digital collectibles” because it is not associated with cryptocurrency.

The central government strictly banned the trading of cryptocurrencies in China last year, following years of crackdowns. It has also been wary of speculation that could lead to asset bubbles in the crypto market. As a result, digital collectibles must be purchased with yuan, and reselling for a profit is banned.

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