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Meta to wind down NFT integrations as China reports a 30,000% increase in NFT complaints

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(Kitco News) - Meta, the parent company of Facebook and Instagram, has come full circle in its journey exploring non-fungible tokens (NFTs) as the tech firm has announced that it will discontinue its support for NFTs just ten months after they first launched.

Stephane Kasriel, Meta’s head of commerce and financial technologies, tweeted about the decision on Monday, saying that the company would be “winding down” its support for NFTs as it explores other ways to engage with its users.

“Some product news: across the company, we're looking closely at what we prioritize to increase our focus,” Kasriel wrote. “We’re winding down digital collectibles (NFTs) for now to focus on other ways to support creators, people, and businesses.”

This development doesn’t mean that Meta is scrapping its metaverse plans altogether, but instead is looking to reapproach how it engages with its users regarding the emerging Web3 landscape.

“We learned a ton that we’ll be able to apply to products we’re continuing to build to support creators, people, and businesses on our apps, both today and in the metaverse,” the head of commerce wrote. “We’ll continue investing in fintech tools that people and businesses will need for the future. We’re streamlining payments w/ Meta Pay, making checkout & payouts easier, and investing in messaging payments across Meta.”

Meta also plans to continue to look for opportunities to help creators and businesses connect with their fans and monetize their work using tools like Reels, the short-form videos that feature on Facebook and Instagram.

The integration of NFTs on Instagram was first introduced for testing in May, which was followed by their integration into Facebook in June. The difficulties the crypto industry faced in 2022, combined with Meta’s need to reduce its staff count and expenses, has resulted in the company reevaluating its engagement with NFTs as it focuses on restructuring.

On Tuesday, Meta CEO Mark Zuckerberg announced the company will be laying off an additional 10,000 employees and close out another 5,000 open positions that haven't been filled as part of his “Year of Efficiency.” The cost-cutting measure comes amid a slowdown in digital ad sales.

“Over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates,” the CEO said in a statement posted to his Facebook page.

These layoffs follow a November round of layoffs where Meta let go more than 11,000 employees, representing 13% of its workforce, which affected all sectors of the company, including its metaverse, augmented reality (AR) and virtual reality (VR) units.

Amazon is developing an NFT platform in stealth mode

NFT complaints skyrocket in China

It’s not just Meta that is dealing with uncomfortable truths about NFTs as authorities in China have reported a 30,000% rise in complaints about NFT scams and price manipulation between 2021 and 2022.

According to a report posted on the social media account of the State Administration for Market Regulation on Tuesday, there were 59,700 NFT-related complaints logged in 2022, up from 198 in 2021. Most of the complaints involved failure to receive items after purchase, refund issues, price manipulation, and high transaction fees.

The report was released the day before World Consumer Rights Day, an annual event where China’s media and authorities single out cases of market abuse. Despite a ban on crypto trading in China, transacting in NFTs is a legal gray area that has yet to be regulated. As a result, the domestic NFT market in China is self-regulated by the industry, which forbids secondary trading.

The lack of clear regulation is hurting China’s NFT industry, as evidenced by the fact that Huanhe, the regulated NFT marketplace of Tencent Holdings, will be shutting down in June and has begun the process of refunding its users. Other NFT platforms in the country are in the process of moving their businesses to Hong Kong, which has taken a more open approach towards cryptocurrencies.

The topic of regulation was brought up during the recent Two Sessions government meetings, with a Chinese parliament member proposing the establishment of a legal definition for digital collectibles and a regulatory framework for the industry.

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