Tencent closes the NFT platform as the government’s policy makes it impossible to thrive

by · July 14, 2022

Tencent closes the NFT platform as the government’s policy makes it impossible to thrive

China’s internet giant Tencent has reportedly shut down one of the two nonfungible token (NFT) platforms due to declining sales aided by the Chinese government’s regressive monetary policy.

Tencent shut down one of its NFT platforms on July 1 while the other struggles to stay afloat. A report from a local newspaper indicates that the liquidation process for the same started in May. The technology giant transferred key executives responsible for managing the NFT platform in the last week of May and completely removed the digital collectibles section from the Tencent News app by the first week of July.

The primary reason for the decline in sales and the final closure of Tencent’s digital collector platform is to blame for inadequate government policies that prohibit buyers from selling their NFTs in private post-purchase transactions, making these NFTSs less lucrative. The lack of a secondary market kills any chance to monetize these digital collectibles.

NFTs gained a lot of traction in China earlier this year with several technology giants such as Tencent and Alibaba showing interest and even launching their own digital collector platforms. However, with the rise in popularity, it also received the attention of the government, which has warned investors to be on the lookout for fraud related to these NFTs.

In March, several Chinese social media giants such as Weibo and WeChat began removing accounts linked to digital collector platforms for fear of a government crackdown. In June, Alibaba launched an NFT platform, but soon deleted all reviews of it from the Internet.

Related: Chinese court rules that the marketplace is guilty of having embossed NFTs from stolen works of art

While the Chinese government is known for its anti-crypto stance in banning all types of cryptocurrency transactions in the country, there is no such direct ban on NFTs. However, large corporations and technology giants remain cautious, fearing strict action by the Beijing government.

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Wu Blockchain, a China-focused Twitter handle, told Cointelegraph that residents are still selling their NFTs in the underground secondary markets, but large technology companies such as Alibaba and Tencent cannot afford to do so.

Despite a ban on crypto-commerce, mining and subsequent warnings against NFTs, Chinese traders have always found a way to circumvent severe regulatory violations. For example, after the ban on crypto-mining in the country last year, China’s share of Bitcoin miners fell to zero from 60%. Recent data, however, suggest that China has climbed back to second place again, indicating that miners found a way despite strict measures taken by the government. Similarly, the number of NFT platforms in the country grew 5X in four months.