Chinese regulatory scrutiny of cryptocurrencies has since made its way into the NFT space, as expected. However, what started out as just a regular deterrent to citizens from investing in NFTs has spread to the platforms that offer such services. One of the platforms that came under fire was Huanhe, an NFT marketplace that was launched by Chinese social media giant Tencent. Now, barely a year after it was launched for operations, the NFT platform is shutting its doors.
Tencent Shuts Down NFT Marketplace
Back in 2021, the popularity of NFTs had been growing rapidly. At this time, there were single NFTs selling for millions of dollars, and individuals and corporations alike rushed to cash in on this new craze. Tencent had naturally followed the trend, but it would turn out to be a wrong move for the social media behemoth.
Tencent announced the launch of Huanhe last August as a platform where users could trade NFTs on the secondary market. As expected, it had seen warm reception from users, especially Chinese NFT investors. But not too long after, trouble would come for the NFT marketplace in the form of governmental regulation.
The Chinese government had moved quickly on the NFT marketplace in the same way it had done on cryptocurrencies months earlier. It had placed a ban on NFTs and their trading in the country, forcing platforms like Huanhe to close down operations.
The Tencent-backed NFT trading marketplace announced that it would be halting activities as the ban had impeded its ability to grow in the market. This is the culmination of Tencent scaling back NFT activities after China’s war against non-fungible tokens had begun a few months earlier.
NFTs Continue To Struggle
While Tencent has had to shut down its NFT marketplace due to regulatory scrutiny, NFTs themselves have not been doing too well. Interest in the space had dwindled as the bear market trend emerged, and it has had a profound impact on NFT trading volume.
Notable NFT collections such as BAYC and CryptoPunks have seen their value drop more than 80%, and others have suffered similar or worse fates. NFT sales are down more than 100%, and the volume is down in a similar fashion.
However, the decline in interest has not seemed to deter new projects from launching. Data from IntoTheBlock shows that new NFT collections being launched in the market continue to rise in August. As of the time of this writing, there are more than 146,000 NFT collections available on the market.