Chinese companies will confirm identities for NFT purchases

According to a report by the South China Morning Post, Chinese private companies implemented an initiative to de-anonymize trading in non-fungible tokens (NFT). Called the “Self-Discipline Initiative”, large companies in this country took on the obligation to verify the identity of users in the digital sector.

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The document was signed by Baidu, JD.com, Tencent Holdings and Alibaba’s affiliated company Ant Group, among others. The companies will start to “require authentication with real names of those who issue, sell and buy” NFT and to only accept legal tender to make payments.

The document is not legally binding and was allegedly not influenced by the Chinese government. Thus “it does not represent the attitude of the government”.

Ultimately, these private companies claimed that they were trying to prevent Chinese citizens from speculating about NFT collections and forced subscriber companies to “resist it firmly”. In particular, the document claims that signing companies will not offer any tokenized products, such as precious metals and securities.

The companies will also have to operate with the necessary permits and certifications that can be burdensome for blockchain service providers in China. Luo Jun, general secretary of the China Computer Industry Association’s Metaware Committee, said the country needs to “implement further regulation.”

Digital assets and cryptocurrencies are a hot topic in the country, China has limited crypto and NFT trading, but still claims that the country needs to “curb financial risk”. However, the document recognized the potential of NFT technology to revolutionize intellectual property rights and the registration of cultural products, the report claims.

Can China lock its citizens out of the NFT sector?

The South China Morning Post clarified that this initiative, despite its alleged independence from government influence, was agreed as a direct response to another initiative taken by “major financial industry associations to” reduce the alleged risk of cryptocurrency trading.

However, China has been cracking down hard on the crypto industry for quite some time. The Asian superpower introduced a ban on crypto mining in 2021 and forced large and medium-sized operations out of the country and has constantly criticized the sector.

China and other world governments claim cryptocurrencies enable money laundering and other illegal activities. Despite the efforts, the country has not been able to prevent its inhabitants from trading, buying or selling crypto and digital assets.

Liu Jiahui, a partner in Derun Lawyers, believes this initiative will not be able to stop speculation or people from trading their digital assets. Jiahui sa:

Digital collectibles in China are the digital assets of works of art and culture, which are not entitled to be financial products or securities products (…). Chinese law stipulates that the owner of property rights may dispose of the property at any time. Digital collectibles have higher liquidity than traditional works of art. It is in fact impossible to ban speculation during circulation.

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At the time of writing, Ethereum (ETH) is trading at $ 1,120 with a 4% profit on the 4-hour chart.