Why These Chinese Companies Will Verify Your Identity For NFT Purchases

1 year ago 69

Per a report from the South China Morning Post, Chinese private companies implemented an initiative to de-anonymize non-fungible token (NFT) trading. Called “Self-Discipline Initiative”, major companies in this country took the commitment to verifying users’ identity in the digital sector.

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

The document is not legally binding and allegedly was not influenced by the Chinese government. Thus, it doesn’t “represent the government’s stance”.

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

The companies will also need to operate with the necessary permits and certifications which can be burdensome for blockchain service providers in China. Luo Jun, secretary-general of the metaverse committee of the China Computer industry Association said the country needs to “implement further regulation”.

Digital assets and cryptocurrencies are a hot topic in the country, China has restricted crypto and NFT trading, still, Jun claims the country needs to “curb financial risks”. However, the document acknowledged the potential for NFT technology to revolutionize intellectual property and cultural product registration, 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” mitigate the alleged risks of trading cryptocurrencies.

However, China has been cracking down on the crypto industry for quite some time. The Asian superpower imposed a ban on crypto mining in 2021 forcing larger and middle 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 its efforts, the country has been unable to prevent its citizens from trading, buying, or selling crypto and digital assets.

Liu Jiahui, partner at Derun Lawyers believes this initiative will be unable to stop speculation or people from trading with their digital assets. Jiahui said:

Digital collectibles in China are the digital assets of art and cultural works, which aren’t entitled to be financial or securities products (…). Chinese laws stipulate that the owner of property rights can dispose of the property at any time. Digital collectibles have higher liquidity than traditional artworks. It is in fact impossible to prohibit speculation during circulation.

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