Two of China's major tech companies—Tencent Holdings and Alibaba Group Holdings—are pursuing the technology despite the government's statements denouncing the NFT market's value.
Securities Times broke the story first in China, acting as a spokesperson for the Chinese Communist Party Outlet People's Daily. The South Morning China Post then reported the story.
A statement made in the remarks claims that "it is common sense that NFT transactions are prone to bubbles," and that most buyers of NFT with a financial motive mainly consider the value of the asset rather than how the piece looks.
Wang Junhui, a staff reporter for the South Morning China Post, writes:
“Inevitably, these strange NFTs will lose value once the frenzied market enthusiasm wanes and the hype dies down.”
As People's Daily reported in its publication from June, the NFT market "may cause chaos, while decentralization may raise security concerns."
China views the crypto market as a potential threat to its financial stability. ICOs and exchanges were outlawed in 2017 after the law prohibited banks from facilitating bitcoin transactions since 2013.
A committee under the State Council, led by Vice-Premier Liu He, announced in May this year that bitcoin mining and trading are being further discouraged.
Although China's two largest tech companies have not made significant progress with NFT-focused R&D projects, both Tencent Holdings and Alibaba Group Holdings have now actively participated in this area.
Huanhe, Tencent's trading platform for NFT assets, launched last month with the goal of integrating NFT assets into QQ Music, the company's streaming music service.
Alipay, Alibaba's wallet application, recently listed two NFT images for sale.
Even so, Chinese proponents of NFTs are still restricted in their marketing activities. In China, transactions are conducted exclusively in Renminbi, the official currency. Moreover, NFTs cannot be resold once they have been purchased because this would be against the nation's financial law.