On April 13, China Internet Finance Association, Bank Of China Limited(601988) Industry Association and China Securities Industry Association jointly issued the “proposal on preventing NFT related financial risks” (hereinafter referred to as the “proposal”).
The proposal points out that in recent years, China’s NFT (non fungible token) market has continued to heat up. As an innovative application of blockchain technology, NFT shows certain potential value in enriching the digital economy model and promoting the development of cultural and creative industries, but there are also risks and hidden dangers such as speculation, money laundering and illegal financial activities.
In order to prevent financial risks, protect the legitimate rights and interests of consumers and maintain the healthy ecology of the industry, China Internet Finance Association, Bank Of China Limited(601988) Industry Association and China Securities Industry Association jointly appeal to member units to jointly launch the following two initiatives.
First, adhere to integrity and innovation and empower the real economy. Practice the concept of science and technology for the good, reasonably select application scenarios, standardize the application of blockchain technology, and give full play to the positive role of NFT in promoting industrial digitization and digital industrialization. Ensure that the value of NFT products is fully supported, guide consumers to consume rationally, and prevent falsely high prices from deviating from the basic law of value. Protect the intellectual property rights of bottom commodities and support genuine digital cultural and creative works. Truthfully, accurately and completely disclose NFT product information to protect consumers’ right to know, choice and fair transaction.
Second, stick to the bottom line of behavior and prevent financial risks. The proposal mentioned that we should resolutely curb the tendency of NFT’s financialization and securitization, strictly prevent the risk of illegal financial activities, and consciously abide by the following codes of conduct: first, we should not include securities, insurance, credit, precious metals and other financial assets in the underlying commodities of NFT, and issue and trade financial products in disguised form. The second is to carry out token issuance financing (ICO) in a disguised form without weakening the non homogeneity of NFT by dividing ownership or batch creation. Third, do not provide centralized trading (centralized bidding, electronic matching, anonymous trading, market makers, etc.), continuous listing trading, standardized contract trading and other services for NFT trading, and set up trading places in violation of regulations in disguise. Fourth, virtual currencies such as bitcoin, Ethereum and TEDA coin are not used as pricing and settlement tools for NFT issuance transactions. Fifth, carry out real name authentication for the issuing, selling and purchasing entities, properly keep the customer’s identity data and issuance transaction records, and actively cooperate with the anti money laundering work. Sixth, do not invest in NFT directly or indirectly, and do not provide financing support for investing in NFT.
“At the same time, we solemnly call on consumers to establish a correct consumption concept, enhance their awareness of self-protection, consciously resist NFT speculation, be vigilant and stay away from NFT related illegal financial activities, and effectively maintain their own property safety. If relevant illegal activities are found, they should be reported to relevant departments in time.”
