Chinese Communist Party warn of NFT hype bubble

According to local sources, the Chinese government has released a series of statements denouncing the value of the non-fungible token, or NFT, market, despite two of the nation’s major tech firms pursuing the technology.

The story was first released locally by the Securities Times — a news publication service acting as a spokesperson for the official Chinese Communist Party outlet People’s Daily — and reported by the South Morning China Post.

The remarks claimed that “it is common sense that there is a huge bubble in NFT transactions”, and that most NFT buyers solely focus on the value of the assets when acquiring with a financial motive, rather than appreciating the visual qualities of the piece.

Staff reporter for the SMCP, Wang Junhui writes:

“Once market enthusiasm wanes and the hype cools, the value of these many strange NFTs will greatly decrease.”

This echoed the rhetoric of a June publication from People’s Daily in which they stated that the NFT market “can be hyped up, leading to chaos, while decentralisation may lead to security concerns”.

Earlier this year, the Chinese government delivered a crushing blow to crypto mining operations in a deliberate attempt to oust unfavored activity from its borders. 

The country’s major tech players Tencent Holdings and Alibaba Group Holding have progressed with NFT-focused research and development initiatives, however, and now actively participate in the space.

Last month, Tencent launched it’s NFT trading platform Huanhe with a view to integrate NFT assets onto its music streaming platform, QQ Music.

Likewise, Alibaba’s fintech partner, Ant Group, recently listed two NFT images for sale within its wallet application Alipay.

Despite this, Chinese NFT advocates still remain restricted in their trading activities. For example, only the nation’s official currency Renminbi can be used for transactions. In addition, NFT’s cannot be resold once purchased as this would constitute a breach of the nation’s financial laws.