Image Source: Visual China

BEIJING, April 13 (TMTPOST) — The National Internet Finance Association of China (NIFA), China Banking Association (CBA) and Securities Association of China (SAC) have called for cautions over the securitization of NFTs (non-fungible tokens).

The three associations stressed that measures should be taken against the securitization trend of NFTs and to prevent illegal financial activities.

An NFT is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. It is now mainly associated with art trades on the Internet.

Although NFTs could contribute to China’s digital economy, they could also lead to speculative trading, money laundering, and illegal financing, said the three associations, who also issued a joint ban on cryptocurrency trading last year.

NFT products should not be used in the issuance of financial assets such as securities, insurance, loans or precious metals, according to the three associations’ statement.

The associations also prohibit their members from weakening the non-fungible nature of NFTs by dividing ownership or mass production.

The trio also said in the statement that their members should not provide trading venues, or financing, for NFTs or set up NFT trading marketplaces.

Cryptocurrencies must not be used to price, or settle NFTs, and real-name authentication is required for NFT issuers, buyers and sellers, for anti-laundering purposes, the trio said.

Lastly, the three associations also prohibit their members from directly or indirectly investing in NFTs.

Chinese tech companies are also cracking down on NFT trading. Chinese internet giants Alibaba and Tencent had recently clamped down on their NFT marketplaces, leading to speculations that believe that the government was planning further measures against NFT trading venues.

See also: WeChat Cracks Down on NFT Trade, Banning Many Official Accounts

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