Tencent shuts down NFT trading platform for fear of government’s strictness

Tencent, one of China’s largest tech giants, has closed one of its two non-fungible token (NFT) marketplaces. Senior executives associated with this platform have been transferred. The main reason for closing it is the strict policies of the Chinese government, under which digital collectibles are prohibited from being sold in the secondary market after buying.

According to a local newspaper report, the process of shutting down the platform started about two months back. The Digital Collectibles section was removed from Tencent’s News app earlier this month. Executives transferred from the platform include Wang Shimu, former in-charge of Tencent’s news division. In China, some social media companies have closed their digital collectibles business for fear of tough measures from the government. These include Alibaba, Weibo and WeChat.

Recently, China’s most popular instant messaging and calling app WeChat banned crypto-related activities on its platform. WeChat has put it in the category of illegal business. Using blockchain technology in NFTs, tokens of unique items are authenticated which are linked to reproducible digital assets. These can include art, music, in-game items, and videos. These can be traded online but cannot be duplicated.

With the growth of business in this segment, there has also been a rise in scam cases. In some such cases, NFT buyers have suffered huge losses. In the US, some major fraud cases related to this segment have been uncovered. Some of the accused have also been arrested. These cases have raised apprehensions about trading in this segment. The popularity of NFTs is also increasing. Sports clubs, automobile companies and pop stars are also getting into this business. Recently the Financial and Security Organizations in China warned against the financial risks associated with NFTs. A recent survey by financial services company Mastercard of nearly 35,000 people in 40 countries found that about 45 percent of these people have bought or can afford to buy NFTs.

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