GST, a non-fungible token (NFT) tied to fitness app STEPN, dropped around 10% after its operator said it would be banned in China this summer.
As Bloomberg reported Friday (May 27), a second cryptocurrency tied to the app, GMT, fell more than 30% before recovering.
STEPN uses blockchain technology that allows users to purchase virtual sneakers in the form of NFTs, which they then use to earn GMT or GST coins by walking or running. But because STEPN has stopped offering GPS services to customers in China, those users will no longer be able to collect tokens. The ban is set to go into effect on July 15.
“STEPN has always attached great importance to compliance obligations and always strictly abides by the relevant requirements of local regulatory agencies,” the firm said on Twitter without mentioning which regulator in China had asked for the move or if had even been requested by regulators in that country.
China has banned the mining and trading of cryptocurrencies, but still allows NFTs and blockchains, with some restrictions. Bloomberg says it uses permission-based blockchains operating under the watch of the government and has forbidden the use of secondary NFT markets such as OpenSea.
Last month, a trip of financial bodies in China — the Internet Financial Association, the China Banking Association and the China Securities Association — issued a series of guidelines aimed at controlling how NFTs are used.
Among the guidelines: NFTs must not be used to issue financial assets such as securities, insurance, loans, or precious metals. In addition, the three organizations say that the pricing and settlement of NFT transactions shouldn’t include cryptocurrencies.
PYMNTS wrote this week about the myriad ways NFT owners have begun to commercialize their tokens, from the NFT collection inspired by Netflix’s The Chilling Adventures of Sabrina to the pop duo The Chainsmoke’s giveaway of 5,000 NFT to frequent concert goers and other hardcore fans.