China:Warning sounded against issuing insurance as NFTs

 China warned yesterday of financial risks associated with non-fungible tokens (NFTs), as three industry bodies jointly issued guidelines to prevent the digital asset market from overheating, reported Reuters.

NFTs must not be used in the issuance of financial assets such as securities, insurance, loans or precious metals, said the joint statement, published on the website of the China Banking Association.

NFTs are ownership certificates of a unique digital item such as a video, recording, or cyber artwork. Such digital collectibles are gaining traction in China and have been embraced by tech companies including Ant Group and Tencent Holdings.

"In recent years, China's NFT market is getting increasingly hot," China's banking, securities and Internet finance associations said in a joint statement.

Although NFTs could contribute to China's digital economy, they could also lead to speculative trading, money laundering, and illegal financing, said the trio, who also issued a joint ban on cryptocurrency trading last year.

In addition, cryptocurrencies must not be used to price, or settle NFTs, and real name authentication is required for NFT issuers, buyers and sellers, for anti-laundering purposes, according to the statement. The associations also bar members from providing trading venues, or financing, for NFTs.

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