Chinese social media giant Tencent forced to close NFT Marketplace
Chinese regulatory scrutiny of cryptocurrencies has since made its way into the NFT space, as expected. However, what started as just a common disincentive for citizens to invest in NFTs has spread to the platforms that offer such services. One of the platforms that came under fire was Huanhe, an NFT marketplace launched by Chinese social media giant Tencent. Now, barely a year after it was launched for operations, the NFT platform is closing its doors.
Tencent shuts down NFT Marketplace
Back in 2021, the popularity of NFTs had grown rapidly. At this point, single NFTs were selling for millions of dollars, and both individuals and companies rushed to cash in on this new craze. Tencent had naturally followed the trend, but it would prove to be a misstep for the social media behemoth.
Tencent announced the launch of Huanhe last August as a platform where users can trade NFTs on the secondary market. As expected, it had received warm reception from users, especially Chinese NFT investors. But not too long after, there would be problems for the NFT market in the form of government regulation.
The Chinese government had moved swiftly on the NFT market in the same way it had done on cryptocurrency months earlier. It had placed a ban on NFTs and their trading in the country, forcing platforms such as Huanhe to shut down operations.
The Tencent-backed NFT trading marketplace announced that it would cease operations as the ban had hindered its ability to grow in the market. This is the culmination of Tencent scaling back NFT activities after China’s war against non-fungible tokens had started a few months earlier.
NFTs continue to struggle
While Tencent has had to shut down its NFT marketplace due to regulatory scrutiny, NFTs themselves haven’t fared so well. Interest in the area had waned as the bear market trend emerged and it has had a profound impact on NFT trading volume.
Notable NFT pools like BAYC and CryptoPunks have seen their value drop more than 80%, and others have suffered similar or worse fates. NFT sales are down more than 100%, and volume is down correspondingly.
However, the decline in interest has not seemed to deter new projects from launching. Data from IntoTheBlock shows that new NFT collections launching in the market continue to rise in August. As of this writing, there are more than 146,000 NFT collections available on the market.
Featured image from Business 2 Community, chart from TradingView.com
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