SNEAK PEEK
- Beijing investors against supporting ventures of NFTs.
- Authorities claimed that it is an illegal fundraising and hype conjecture.
- Eight people were already detained because of this .
Beijing’s market watchdog has advised investors against supporting ventures advertised nationally as NFTs, or ideas associated with the metaverse because users may use them for dishonest or illegal fundraising.
Many of these projects are drawn to the idea of “metaverse investing,” or NFTs, which carry a high level of risk and include speculative elements, according to a warning issued Tuesday by the Beijing Municipal Administration for Market Regulation.
The Authority cautioned people against engaging in “illegal fundraising efforts” and “hype and conjecture.”
While China will outlaw cryptocurrency transactions in 2021, strict regulations for NFTs still need to be implemented. Although numerous websites offer these services, Chinese users continue to buy and trade digital goods.
For instance, in a recent partnership with layer-1 public blockchain Conflux Network, Xiaohongshu, or “Little Red Book,” a well-known social media network dubbed the Chinese version of Instagram, has built an NFT section named “R-Space.”
According to police reports, eight people were detained in October in Shangqiu City, in eastern Henan Province, on suspicion of running online scams using digital collectibles to make over 2.65 million yuan (US$391,000).
According to Yifan He, CEO of Red Date Technology, which created the state-backed blockchain network Blockchain-based Service Network, Chinese regulators are especially tough on companies that have what are known as “unlawful capital pools.” Chinese NFT trading platforms conduct transactions through capital pools.
A popular tourist destination in South China’s Hainan province said it would strengthen its control of digital collectibles last month. According to the provincial government, this is because they carry the danger of fraud, money laundering, and illegal fundraising.
