It is well-known that the NFT scene in China is complicated, to say the least. Very strict laws have been put in place that guides how NFTs can be dealt with and WeChat has even been known to close accounts that deal in NFT trading on its platform.
Now, the Chinese NFT scene seems to have suffered a huge blow as Huanhe, the NFT app launched by Tencent, will be shelving most of its operations. This news was reported by the South China Morning Post on August 16, 2022.
What Went Wrong?
Huanhe users had first sensed that something was wrong after, in July, the Tencent News app reworked its section that sold digital assets and appeared to stop selling them. According to the report, Huanhe has announced that it will stop issuing digital collectables (this is the name that NFTs are called within China) from now on. Those who had previously bought NFTs on the platform can get refunds and have those assets destroyed.
As for those who don’t want a refund, they can still display and share their NFTs. Essentially, the app is putting a halt to all new NFT-related activities. This comes just one year after the app was launched, marking Tencent’s foray into the NFT space.
But even when the app was active, the activities of users were quite limited, in accordance with Chinese digital assets laws. Users could only buy NFTs with fiat currency and could only transfer them to others for non-profit purposes. Again, this was in line with Chinese law, which has always sought to discourage the speculative nature of a lot of for-profit NFTs. With cryptocurrency being banned in the country, the NFT scene was always vastly different to those in the West.
But as per the report, the app did not shut down due to Chinese law interference. Instead, it had been dealing with low sales for several months, with even its limited edition pieces remaining unsold. On the backend, Tencent’s Platform and Content division, which was behind the app, saw many layoffs earlier this year.
This combination of roadblocks contributed to the decision to shutter the Huanhe app, with an official statement citing, “the company’s considerations to focus on core strategic [businesses]”.
Given that many other top Chinese firms like JD.com are also in the NFT sector, Chinese NFT lovers will be able to get their needs met elsewhere.
The Complexities of Chinese NFTs
While the closure of the Huanhe app is sad to hear, it does speak to the complex NFT scene in China. Obviously, the stringent laws in the country contribute to its landscape and there is no telling how the situation would have played out if NFTs could be traded with crypto and could be bought speculatively as they are in the West.
Perhaps this contributed to the low sales? As studies have shown in the past, most people buy NFTs for profit-making and if that is taken away, the space might be less robust.