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China's Tencent shuts down NFT platform citing unfavorable policies

By MT Newswires
On July 1, Tencent closed one of its NFT platforms, while the other one is struggling financially. File Photo by Stephen Shaver/UPI
On July 1, Tencent closed one of its NFT platforms, while the other one is struggling financially. File Photo by Stephen Shaver/UPI | License Photo

July 15 (MT Newswires) -- The leading technology giant in China, Tencent, has reportedly shut down one of its two NFT platforms due to a decrease in sales buoyed by the Chinese government's regressive monetary policies.

On July 1, Tencent closed one of its NFT platforms, while the other one is struggling financially. This process began as far back as May when the crypto market collapsed, wiping billions of dollars from the industry.

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The company transferred certain executives responsible for managing the NFT platform in the last week of May and then in the first week of July, it deleted the digital collectible section from its Tencent News app.

The plunge in sales has been attributed to flawed government policies. In China, residents can buy digital collectibles but cannot sell them in private transactions after purchase, which has affected overall profitability. Due to the country's crackdown on the use of all forms of digital currencies in the decentralized finance space, there are no official secondary markets to offload NFTs. This has made it difficult to turn a profit on digital collectibles.

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Non-fungible tokens have became popular among crypto lovers in China, leading to tech giants such as Alibaba and Tencent showing a huge interest, which has culminated in the launch of their respective NFT platforms. With that said, the growth of digital collectibles has brought scrutiny and the Chinese government continues to warn investors about the risks of fraudulent schemes.

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In March, social media giants such as WeChat and Weibo began efforts to remove accounts associated with NFTs in a bid to deter further restrictive measures on their business operations.

Alibaba launched a digital collectibles platform in June, but the announcement has since disappeared from the Internet. Despite being an unfriendly crypto nation where transactions involving cryptocurrencies are banned, China has not imposed an outright ban on NFTs.

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However, tech giants and big businesses are treading cautiously so as not to lose licenses and certificates of operation, while residents continue to offload their NFTs in unofficial secondary markets. Unfortunately, big tech companies like Tencent and Alibaba cannot curtail such activities.

Despite a ban by the government, China remains second in the ranks of bitcoin miners. This shows that irrespective of strict measures, certain miners have found ways around them and in June, it was revealed that there has been a fivefold increase in the number of NFT platforms in the last four months.

Copyright © 2022 MT Newswires. All rights reserved. MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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