“In recent years, the Chinese market for NFTs is becoming increasingly hot,” China’s Internet banking, securities and finance associations said in a joint statement.
While NFTs could contribute to China’s digital economy, they could also lead to speculative trading, money laundering and illegal financing, said the trio, which also issued a joint cryptocurrency trading ban last year.
NFTs should not be used in the issuance of financial assets such as securities, insurance, loans or precious metals, according to the statement, posted on the website of the China Banking Association. The associations also prohibited their members from offering trading outlets or financing for NFTs. In addition, cryptocurrencies should not be used to price or settle NFTs, and real-name authentication of NFT issuers, buyers, and sellers is required for anti-money laundering purposes, according to the statement.
Chinese tech giants, including Jack Ma’s Ant and video game developer Tencent, have opened up online marketplaces, while a growing number of companies are exploring NFTs.
Last month, Xtep International released its first digital collection of running shoes, and last year, the official Xinhua news agency released a collection of digital media photos via NFTs.
Bubble?
A recent report from Nansen sheds light on what is currently happening in the market. One in three NFT collections are expired or have little or no trading activity and another third are trading below the amount it costs issuers to obtain the tokens. Nansen analyzed around 8,400 collections made up of 19.3 million individual NFTs on the Ethereum blockchain.
Industry participants say the drop is more a sign of a frantic cooling in demand than the bursting of a bubble. NFTs are still touted for use in everything from video games to commerce.
The value of NFTs can also plummet if creators don’t come up with a marketing plan or if the collection is replaced by newer, shinier projects. Many NFTs that are simply digital images, so-called PFPs or profile images, are particularly vulnerable to price drops.
Demand also appears to be concentrated. The number of repeat buyers outnumbers new entrants by a ratio of seven to one, according to Nansen. Overall, the total number of NFT buyers has increased significantly from a year ago, though that number appears to have peaked in early February, the researcher found.
NFTs that have ceased to generate interest on trading platforms may still have a broader purpose, much like the rest of the art and collectibles world.
“They are not dead,” said Javier González, an engineer at Nansen. “You can still look at them. But some collections are not exchanged, people are not interested, they are just memories of the past, and that’s it.”
Source: Ambito
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