Regulatory authorities in China have issued a warning to non-fungible token (NFT) investors, alerting them of the hidden risks associated with these assets. The warning was issued by three regulators – the China Banking Association, the China Internet Finance Association and the Securities Association of China.
The alert urged authorities to combat NFT speculation and securitization to minimize unlawful activities. The warning, according to the issuers, was targeted at driving innovation in the blockchain and crypto industry.
China’s trade organizations also released a set of standards for NFTs and noted that such tokenized content should not include bonds, insurance, precious metals and other financial assets going forward. Investors, developers and traders were warned not to use Bitcoin, Ethereum and Tether in NFT pricing and settlement.
In addition, marketplaces were urged to perform personal information verification and ensure that Anti-Money Laundering (AML), KYC, proof of reserve and CFT standards were met. Trade and finance were warned not to invest in NFTs nor render assistance to anyone doing so.
The rules include the non-provision of centralized transactions and avoid the weakening of a token’s nonfungibility by generating ownership in secret or fraudulently conducting financing of token issuance.
“We solemnly call on consumers to establish correct consumption concepts, enhance their awareness of self-protection, consciously resist NFT speculation and speculation, be vigilant and stay away from NFT-related illegal financial activities, and effectively safeguard their property safety,” a joint statement by the regulators read.
“If relevant illegal activities are found, they should be reported to the relevant departments in a timely manner.”