Hainan province, a popular tourist destination in South China, published a notice on Sunday vowing to step up oversight on non-fungible tokens (NFT), or “digital collectibles,” which authorities said come with risks of fraud, money laundering and illegal fundraising.

See related article: China NFT platforms expand into Hong Kong in face of compliance risks on mainland

Fast facts

  • The Hainan’s markets regulator and nine other state agencies said in the memo that digital collectible firms should register with relevant authorities or obtain their approval that assesses the artwork and internet and blockchain information management rules. 
  • The Hainan authorities will also work to monitor and prevent financial risks related to digital collectible trading platforms in the region.
  • The local authorities added that although regulating digital collectibles is an urgent matter, it’s essential to guide the NFT industry to empower its tourism and culture as Hainan develops its free trade port.
  • In 2018, the State Council of China announced its plan to transform Hainan province, an island in the South China Sea, into a free-trade zone, making it a commercial gateway to the Pacific and Indian Oceans.
  • China banned cryptocurrency transactions in 2021, but has yet to spell out hard and fast rules for NFTs. State media have attacked “speculative behavior” in the sector.

See related article: China state-backed NFT trading platform to launch on Jan. 1