China NFT Weekly: A Bad Week for Crypto
Digestible news on the latest developments across the fields of Web3, NFTs, blockchain, and metaverse in China and beyond, compiled for you every week by Pandaily.
This week: Tencent’s NFT marketplace Huanhe to close down, Zipmex becomes latest crypto exchange to halt withdrawals, Hong Kong monetary chief said crypto and DeFi won’t disappear, and more.
Tencent to Shut Down NFT Platform Huanhe
Tencent is laying off an undisclosed number of employees from its NFT purchasing and collection platform Huanhe 幻核, with the ultimate intention of discontinuing the venture, according to sources familiar with the situation. Caixin Global and Forkast first reported the story.
- The news came amid intensified regulatory scrutiny over digital assets in China, with tech giants including Tencent and Ant Group signing a pact last month to stop NFT secondary trading.
- Since its launch in August 2021, Huanhe has been adjusting its development strategy to avoid regulatory risks. Sales on the platform have slowed since June, and the company is set to roll out an international version of the NFT platform.
- Meanwhile, Jingtan, an NFT platform run by fintech giant Ant Group, has not issued any notices of layoffs, sources told Caixin.
- Chinese regulatory authorities and state media have repeatedly warned the public about risks associated with secondary trading and speculation of digital assets, but rules around NFTs remain blurry.
- Last September, Beijing issued a blanket ban on all crypto-related trading and mining, while making blockchain technology a strategic priority.
- The Blockchain-based Service Network, or BSN, is part of the country’s efforts to boost its capabilities in the sector.
- Chinese President Xi Jinping has declared that his country needs to “seize the opportunities” presented by blockchain technology. (Forkast, Caixin Global)
READ MORE: Chinese Tech Giants Vow to End NFT Speculation
Zipmex Becomes Latest Crypto Exchange to Block Withdrawals
Singapore-based crypto exchange Zipmex halted withdrawals, becoming the latest company caught in the fallout from a series of defaults that are spreading throughout the digital assets industry. The Washington Post and Bloomberg first reported the story.
- Founded in 2018, Zipmex lists two million users, and operates in Singapore, Thailand, Australia, and Indonesia. With its native token trading below 40 cents, down over 90 percent from its peak, the platform is encountering severe financial difficulties stemming from dealings with troubled crypto lenders such as Babel Finance and Celsius Network.
- “Due to a combination of circumstances beyond our control including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice,” the company wrote on Twitter last week.
- “Our exposure to Celsius was minimal. As such, we were intending to write this off against our own balance sheet,” the company said in another statement on Thursday.
- Zipmex is reportedly discussing its options with two firms. Earlier, the company’s Thailand chief executive appeared in a since-deleted YouTube video, saying that Zipmex is negotiating a potential bailout with investors.
- One of Zipmex’s most notable services, ZipUp+, which offers as much as 10 percent returns on crypto deposits, is currently paused. (The Washington Post, Bloomberg)
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Hong Kong Monetary Chief Says Crypto and DeFi Won’t Disappear
Hong Kong Monetary Authority (HKMA) CEO Eddie Yue said that more scrutiny of stablecoins could help to reduce risks from DeFi, but the technology, which seeks to remove the need for financial intermediaries from lending and investing, will continue to play an important role in the financial system. Reuters and CoinDesk first reported the story.
- Speaking during a meeting of G20 financial officials, Yue called for greater scrutiny over the crypto industry to prevent another crash like that of algorithmic stablecoin terraUSD (UST) and its companion token, LUNA, according to CoinDesk, citing a report by FinBold.
- “Despite the Terra-Luna incident, I think crypto and DeFi won’t disappear – though they might be held back – because the technology and the business innovation behind these developments are likely to be important for our future financial system,” Yue said.
- The CEO further argued that stablecoins and crypto exchanges are gateways to DeFi projects, and hence easier to regulate them than the products themselves.
- In January, HKMA issued a statement signalling it would continue to explore crypto technology with caution by “striking the striking the right balance between maintaining a safe and efficient financial system in Hong Kong and supporting financial innovation,” followed by a discussion paper next year saying the rise of stablecoin could potentially harm Hong Kong’s local currency. (CoinDesk, Reuters)
Hong Kong Launches First Metaverse Churches With Avatars and Virtual Preachers
In February, Hong Kong’s Baptist minister Reverend Enoch Lam Yee-lok started Me Church, a church in the metaverse, where people can attend virtually as avatars. SCMP first reported the story.
- The Reverend said it was done in order to provide a solution for church-goers who are inconvenienced by the special administrative region’s Covid rules, as well as for those who might find traditional services boring.
- Lam, despite being in his 60s, is known for his unconventional preaching methods. In addition to landing the metaverse project to target younger, more tech-savvy churchgoers, the Reverend has also created So Gor (Brother Jesus), a standup-comedy show to promote the religion.
- Lam also said that Covid has shaken the attitudes of older churchgoers, who have now become more used to attending services online from the comfort of their homes.
- Online churches have become increasingly popular in recent years, with some churches even accepting crypto as donations. Globally, one of the more well-known churches is Life.Church, an American project grown out of a network of physical churches.
- A church in the metaverse could potentially offer a more direct, visceral way to engage with the bible, the Reverend explained, using the story of Noah, who built an ark to prepare for a massive flood nobody believed was coming. “They (young people) will not just sit still and listen to you,” he said. “They’ll want to jump in and build Noah’s Ark themselves.” (SCMP)
Indian Finance Minister Supports Central Bank’s Crypto Ban, Seeks International Collaboration
India’s Finance Minister Nirmala Sitharaman has reiterated the stance taken by the Reserve Bank of India (RBI) to ban crypto, but said significant international collaboration is required in order for any legislation to pass. CoinDesk and TechCrunch first reported the story.
- In a statement written in response to questions raised by Thirumaavalavan Thol, a member of Parliament, the Finance Minister said: “RBI has recommended for framing of legislation on this sector. RBI is of the view that cryptocurrencies should be prohibited,” she said.
- “Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Therefore any legislation for regulation or for banning can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” she added.
- The Financial Stability Board (FSB), a body of regulators, treasury officials, and central bankers from the Group of 20 economies, including India, said earlier this month that it would propose “robust” global rules for cryptocurrencies in October this year. The FSB said crypto assets were predominantly used for “speculative purposes” and didn’t operate in a “regulation-free space.”
- Earlier this year, India made a move to tax transactions and profits related to crypto trading. This was viewed as one of the first steps that the central bank has taken to regulate the industry. (CoinDesk, TechCrunch)
Minecraft Developer Mojang Bans NFTs
Minecraft developer Mojang said on Wednesday that it will institute a ban on blockchain technology and NFTs. Protocol and Yahoo Finance first reported the story.
- Minecrafthas a marketplace where people can sell their creations for others to use. Mojang noted that some companies recently started offering NFTs associated with Minecraft skin packs and world files that people can buy.
- The studio said it might have been possible for players to earn Minecraft NFTs for activities completed inside the game or elsewhere, but Mojang is not on board with any of that.
- The company further said that creators may continue to use the game as a platform to create and sell NFTs, but the digital assets will not be integrated with Minecraft client and server applications.
- “To ensure that Minecraft players have a safe and inclusive experience, blockchain technologies are not permitted to be integrated inside our Minecraft client and server applications, nor may they be utilized to create NFTs associated with any in-game content, including worlds, skins, persona items, or other mods,” Mojang wrote in the post.
- “We will also be paying close attention to how blockchain technology evolves over time to ensure that the above principles are withheld and determine whether it will allow for more secure experiences or other practical and inclusive applications in gaming,” the company added. “However, we have no plans of implementing blockchain technology into Minecraft right now.” (Protocol, Yahoo Finance)
That’s it for this week’s newsletter – thanks for reading! As always, we welcome any feedback on how to make this newsletter better. Write to us at [email protected]. See you again next week!