Meta to Discontinue NFT Integrations as China Reports a 30,000% Increase in NFT Complaints

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(Kitco News) – Meta, the parent company of Facebook and Instagram, has come full circle in its journey exploring non-fungible tokens (NFTs) as the tech firm has announced that it will end support for NFTs just ten months after they first launched.

Stephane Kasriel, Meta’s head of trading and financial technology, tweeted about the decision on Monday, saying the company would “wind down” support for NFTs as it explores other ways to engage with users.

“Some product news: across the company, we’re taking a hard look at our priorities to increase our focus,” Kasriel wrote. “We are discontinuing digital collectibles (NFT) for now to focus on other ways to support creators, people and businesses.”

This development doesn’t mean that Meta is scrapping its metaverse plans entirely, but instead wants to look at how it engages with users regarding the new Web3 landscape.

“We learned a ton that we’ll be able to apply to products we continue to build to support creators, people, and businesses on our apps, both today and in the metaverse,” the commerce chief wrote. “We will continue to invest in fintech tools that people and businesses will need for the future. We are streamlining payments with Meta Pay, making withdrawals and payouts easier, and investing in message payments across Meta.”

Meta also plans to continue looking for opportunities to help creators and businesses connect with fans and monetize their work using tools like Reels, short-form videos on Facebook and Instagram.

The integration of NFTs on Instagram was first introduced for testing in May, which was followed by the integration in Facebook in June. The difficulties the crypto industry faced in 2022, combined with Meta’s need to reduce headcount and expenses, has resulted in the company reassessing its involvement with NFTs as it focuses on restructuring.

On Tuesday, Meta CEO Mark Zuckerberg announced that the company will lay off another 10,000 employees and close another 5,000 unfilled vacancies as part of his “Year of Efficiency.” The cost reduction measure comes amid a decline in digital advertising sales.

“Over the next couple of months, organization leaders will announce restructuring plans focused on flattening our organizations, canceling lower-priority projects and reducing our hiring rates,” the CEO said in a statement on his Facebook page.

These layoffs follow a round of layoffs in November in which Meta let go of more than 11,000 employees, representing 13% of its workforce, affecting all sectors of the company, including metaverse, augmented reality (AR) and virtual reality (VR) devices.

NFT complaints skyrocket in China

Meta is not the only one dealing with uncomfortable truths about NFTs as authorities in China have reported a 30,000% increase in complaints of NFT fraud and price manipulation between 2021 and 2022.

According to a report posted on the social media account of the State Administration for Market Regulation on Tuesday, 59,700 NFT-related complaints were logged in 2022, up from 198 in 2021. Most complaints were about non-receipt of goods after purchase, refund issues , price manipulation and high transaction fees.

The report was released the day before World Consumer Rights Day, an annual event where China’s media and government highlight cases of market abuse. Despite a ban on crypto trading in China, transactions in NFTs are a legal gray area that has yet to be regulated. As a result, the domestic NFT market in China is self-regulated by the industry, which prohibits secondary trading.

The lack of clear regulation is hurting China’s NFT industry, as evidenced by the fact that Huanhe, the regulated NFT marketplace of Tencent Holdings, will shut down in June and has begun the process of refunding users. Other NFT platforms in the country are moving their operations to Hong Kong, which has taken a more open approach to cryptocurrencies.

The topic of regulation was raised during the recent two-session cabinet meetings, with a Chinese member of parliament proposing the establishment of a legal definition for digital collectibles and a regulatory framework for the industry.