Chinese tech giants Alibaba and Tencent recently launched support for Non-Fungible Tokens (NFTs), created NFT marketplaces, listed NFTs for sale, and profited from of it.
Now, they’re rewriting history.
A search for “NFT” on Alibaba’s digital flea market Xianyu, which previously returned dozens of live listings, now boasts precisely zero.
Alibaba-owned South China Morning Post reported this week that Alibaba and Tencent have renamed all NFTs to “digital collectibles” and is phasing out its former NFT initiatives.
It’s not hard to figure out why. High-ranking Beijing officials say NFTs are “a potentially huge bubble,” according to China Investment Corp’s Winston Ma (via The Street).
Tencent’s NFT marketplace, Huanhe, immediately changed “NFTs” for “digital collectibles” after a recent article published by the Securities Times (supervised by the Chinese Communist Party) said, “it is common sense that there is a huge bubble in NFT transactions.”
Tencent has also scrubbed the word “NFT” from its platform, also opting for the more benign “digital collectible.”
Alibaba deep in blockchain patents
When Xi was praising blockchain in 2018, crypto development at Alibaba advanced energetically.
It filed for 880 patents in 2019 and 586 blockchain-related patents in 2020, making Alibaba a leader in patents related to blockchain held by a single corporation.
Tencent also owns over 700 patents mentioning blockchain.
- Alibaba’s Jack Ma quickly kowtowed with cautious crypto forecasts like, “even if it works, the whole international rules on trade and financing are going to be completely changed.”
- Alibaba had set up a cryptocurrency mining platform in 2019, but stopped offering all mining rigs for sale in September 2021 in response to a People’s Bank of China rule banning cryptocurrency mining activities.
- Alibaba halted all buying and selling of cryptocurrencies on its platform, in deference to Beijing.
This year, Xi banned most crypto activities. Immediately, Alibaba and Tencent slammed their brakes on blockchain.
Xi is preparing for the monopolistic launch of his central bank digital currency (CBDC) during the February 2022 Olympics.
Tencent has been working with the government to develop China’s CBDC.
Chinese tech must follow Beijing
The combined market cap of Alibaba and Tencent exceeds $1 trillion.
Because both are based in China, they are highly sensitive to Chinese government policy — including vicissitudes toward cryptocurrencies, blockchain, and NFTs.
Compliance with Beijing is mandatory. Chinese officials famously disappeared Alibaba co-founder Jack Ma after he criticized Chinese policy and called for reforms of China’s financial system.
Ma stepped down from Alibaba and has kept quiet since.
- Alibaba is a Chinese e-commerce giant co-founded by Jack Ma that operates the money transfer platform Alipay.
- Alibaba also oversees Ant Group and its blockchain technology platform, Antchain.
- Tencent is an IT company with holdings in the fintech, entertainment, cloud computing, and advertising. Tencent claims to be the first Chinese company to issue an invoice on a blockchain.
The Wall Street Journal reported that Xi Jinping personally canceled Ant Group’s $37 billion IPO, which would have been the world’s largest IPO ever.
An AntChain executive now “firmly opposes any form of illicit activity conducted in the name of digital collectibles,” including “any form of price speculation on digital collectibles.”
Quite a proclamation, given that price speculation has been the primary use of NFTs all year — including when Alibaba was profiting from its own NFT marketplaces.
Alibaba still has quite a few blockchain operations that will need to be discontinued if Xi presses harder.
At Xi’s whim
Alibaba Cloud has not yet scrubbed its webpages of Blockchain-as-a-Service, which includes Hyperledger Fabric, Ant Blockchain technologies, and Quorum.
Alibaba even integrated blockchain into its import service Koala in March last year, which still seemingly passes Beijing’s scrutiny.
Tencent also launched Tencent Industrial Accelerator to boost the use of blockchain in China in May 2020.
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