Hainan, a popular tourist destination in South China, aims to increase oversight on non-fungible tokens (NFTs) or “digital collectibles” due to the risks of fraud, money laundering, and illegal fundraising.

The province’s markets regulator and other state agencies stated that digital collectible firms must register with relevant authorities or receive approval after a review of their artwork, internet, and blockchain information management rules.

The authorities will monitor and prevent financial risks in digital collectible trading platforms in Hainan.

Regulating NFTs is considered a priority, but the authorities also want to support the growth of the industry and its contribution to tourism and culture as Hainan becomes a free-trade port.

In 2018, China announced its plan to transform Hainan into a free-trade zone. Although cryptocurrency transactions were banned in 2021, no official rules for NFTs have been established, and state media have criticized the sector for “speculative behavior.”