China NFT Weekly: A Bad Week for Crypto

Digestible news on the latest developments across the fields of Web3, NFT, blockchain and metaverse in China and beyond, collected for you every week by Pandaily.

This week: Tencent’s NFT marketplace Huanhe closes, Zipmex becomes latest crypto exchange to halt withdrawals, Hong Kong’s money chief says crypto and DeFi won’t go away, and more.

Tencent to shut down NFT platform Huanhe

Tencent is laying off an undisclosed number of employees from its NFT procurement and fundraising platform Huanhe 幻核, with the ultimate intention of discontinuing the venture, according to sources familiar with the situation. Caixin Global and Forkast first reported the story.

• The news came amid intensified regulatory scrutiny of digital assets in China, with tech giants including Tencent and Ant Group signing a pact last month to stop NFTs secondary trading.
• Since the launch in August 2021, Huanhe has adjusted its development strategy to avoid regulatory risks. Sales on the platform have decreased since June, and the company is to launch an international version of the NFT platform.
• Meanwhile, Jingtan, an NFT platform operated by fintech giant Ant Group, has not issued any notices of layoffs, sources told Caixin.
• Chinese regulators and state media have repeatedly warned the public about the risks associated with secondary trading and speculation in digital assets, but the rules surrounding NFTs remain unclear.
• Last September, Beijing issued a blanket ban on all crypto-related trading and mining, while making blockchain technology a strategic priority.
  • The blockchain-based service network, or BSN, is part of the country’s efforts to increase its capabilities in the sector.
  • Chinese President Xi Jinping has declared that his country must “seize the opportunities” offered by blockchain technology. (Rejection, Caixin Global)

READ MORE: Chinese tech giants vow to end NFT speculation

Zipmex becomes the latest crypto exchange to block withdrawals

Singapore-based crypto exchange Zipmex halted withdrawals, becoming the latest company caught in the fallout from a series of defaults spreading across the digital asset industry. The Washington Post and Bloomberg first reported the story.

• Zipmex was founded in 2018 and boasts two million users, operating in Singapore, Thailand, Australia and Indonesia. With its initial token trading below 40 cents, down over 90 percent from its peak, the platform is facing severe financial difficulties stemming from trading with troubled crypto lenders such as Babel Finance and Celsius Network.
• “Due to a combination of circumstances beyond our control, including volatile market conditions, and the resulting financial difficulties of our key business partners, in order to maintain the integrity of our platform, we will be pausing withdrawals until further notice,” the company wrote on Twitter recently. week.
• “Our exposure to Celsius was minimal. As such, we intended to write this off against our own balance sheet,” the company said in a separate statement on Thursday.
• Zipmex is reportedly discussing its options with two firms. Earlier, the company’s Thailand boss appeared in a since-deleted YouTube video, saying Zipmex was negotiating a potential bailout with investors.
• One of Zipmex’s most notable services, ZipUp+, which offers as much as 10 percent returns on crypto deposits, is currently paused. (The Washington Post, Bloomberg)

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Hong Kong Monetary Chief Says Crypto and DeFi Will Not Disappear

Hong Kong Monetary Authority (HKMA) chief executive Eddie Yue said more scrutiny of stablecoins could help reduce risks from DeFi, but the technology, which seeks to remove the need for financial intermediaries from lending and investing, will continue to play an important role in the financial system. Reuters and CoinDesk first reported the story.

• Speaking during a meeting of G20 financial officials, Yue called for greater scrutiny of the crypto industry to prevent another crash like that of algorithmic stablecoin terraUSD (UST) and its companion, LUNA, according to CoinDesk, citing a report by FinBold.
• “Despite the Terra-Luna incident, I believe that crypto and DeFi will not disappear – although they may be held back – because the technology and business innovation behind these developments will likely be important to our future financial system,” Yue said.
• The CEO further claimed that stablecoins and crypto exchanges are gateways to DeFi projects, and thus easier to regulate than the products themselves.
• In January, the HKMA issued a statement signaling that it would continue to explore crypto-technology with caution by “striking the right balance between maintaining a safe and efficient financial system in Hong Kong and supporting financial innovation,” followed by a discussion paper next year that says the rise of the stablecoin could potentially hurt Hong Kong’s local currency. (CoinDesk, Reuters)

Hong Kong launches first Metaverse churches with avatars and virtual preachers

In February, Hong Kong Baptist minister Reverend Enoch Lam started Yee-lok Me Church, a church in the metaverse where people can participate virtually as avatars. SCMP first reported the story.

• The priest said it was done to provide a solution for churchgoers inconvenienced by the special administrative region’s Covid rules, as well as for those who may find traditional services boring.
• Lam, despite being in his 60s, is known for his unconventional preaching methods. In addition to landing the metaverse project to target younger, more tech-savvy churchgoers, Pastor has also created Then Gor (Brother Jesus), a stand-up comedy show to promote the religion.
• Lam also said that Covid has shaken the attitudes of older churchgoers, who have now become more accustomed to attending services online from home.
• Online churches have become increasingly popular in recent years, with some churches even accepting crypto as donations. Globally, one of the better-known churches is Life.Church, an American project grown out of a network of physical churches.
• A church in the metaverse could potentially offer a more direct, visceral way to engage with the Bible, the pastor explained, using the story of Noah, who built an ark to prepare for a massive flood that no one thought was coming. “They (young people) won’t just sit quietly and listen to you,” he said. “They want to jump in and build Noah’s ark themselves.” (SCMP)

Indian finance minister backs central bank’s crypto ban, seeks international cooperation

India’s Finance Minister Nirmala Sitharaman has reiterated the stance taken by the Reserve Bank of India (RBI) to ban crypto, but said significant international cooperation is needed for any legislation to be passed. CoinDesk and TechCrunch first reported the story.

• In a statement written in response to questions raised by Thirumaavalavan Thol, a Member of Parliament, the Finance Minister said, “RBI has recommended for framing legislation on this sector. RBI is of the view that cryptocurrencies should be banned, she said.
• “Cryptocurrencies are by definition borderless and require international cooperation to prevent regulatory arbitrage. Therefore, any legislation for regulation or prohibition can be effective only after significant international cooperation on the evaluation of risks and benefits and the development of common taxonomy and standards,” she added.
• The Financial Stability Board (FSB), a body of regulators, finance officials and central bankers from the Group of 20 economies, including India, said earlier this month that it would propose “robust” global rules for cryptocurrencies in October this year. The FSB said crypto-assets were mainly used for “speculative purposes” and did not operate in a “regulation-free space.”
• Earlier this year, India made a move to tax transactions and profits related to crypto trading. This was seen as one of the first steps the central bank has taken to regulate the industry. (CoinDesk, TechCrunch)

Minecraft developer Mojang bans NFTs

Minecraft developer Mojang said on Wednesday that it will introduce a ban on blockchain technology and NFTs. Protocol and Yahoo Finance first reported the story.

• Minecraft has a marketplace where people can sell their creations for others to use. Mojang noted that some companies recently started offering NFTs tied to Minecraft skin packs and world files for people to purchase.
• The studio said it may have been possible for players to earn Minecraft NFTs for activities completed in-game or elsewhere, but Mojang isn’t in on any of that.
• The company further said that creators can continue to use the game as a platform to create and sell NFTs, but the digital assets will not be integrated with Minecraft client and server applications.
• “To ensure that Minecraft players have a safe and inclusive experience, blockchain technologies are not allowed to be integrated into our Minecraft client and server applications, nor can they be used to create NFTs associated with in-game content, including worlds, skins , persona elements or other mods,” Mojang wrote in the post.
• “We will also closely monitor how blockchain technology evolves over time to ensure that the above principles are upheld and determine whether it will allow for more secure experiences or other practical and inclusive applications in games,” the company added. “However, we have no plans to implement blockchain technology in Minecraft right now.” (Protocol, Yahoo Finance)

That’s it for this week’s newsletter – thanks for reading! As always, we welcome feedback on how we can make this newsletter better. Write to us at [email protected]. See you again next week!