The Beijing Municipal Administration for Market Regulation has issued a warning to investors to stay alert for illegal fundraising activities related to NFTs, which contain speculative elements and come with high risk. Despite China’s ban on cryptocurrency transactions in 2021, many platforms continue to offer NFT trading services.
Rise of NFT Trading in China
The popularity of NFTs, also known as “digital collectibles,” has been on the rise in China. For instance, the Chinese equivalent of Instagram, Xiaohongshu, has launched its NFT section called “R-Space” through a collaboration with the Conflux Network.
According to Yifan He, Chief of Red Date Technology, Chinese regulators are stringent about businesses that operate unauthorized capital pools. This means that Chinese NFT trading platforms must process transactions through authorized capital pools.
Read More: White House Advisors Release Roadmap to Mitigate Risks of Cryptocurrencies
Increased Oversight of Digital Collectibles
In light of the risks of fraud, money laundering, and illegal fundraising, Hainan province has pledged to step up its oversight of digital collectibles. This follows the arrest of eight individuals in eastern Henan province in October for conducting internet scams through digital collectibles, resulting in the theft of over 2.65 million yuan.
The Beijing Municipal Administration for Market Regulation has urged investors to stay alert and resist being influenced by hype and speculation surrounding NFT investments. With the rise of NFT trading in China and strict regulations for NFT businesses, it is crucial for investors to be aware of the risks associated with these investments.
