Investors are concerned about the trajectory of the domestic market due to China’s inconsistent signals regarding its domestic NFT sector.
It’s no secret that China despises all things crypto, as seen by the country’s decision to ban the digital asset market entirely last year. Despite the restriction, one component of the cryptocurrency industry has prospered in the area: the nonfungible token (NFT) market. Given recent developments, however, this may not be the case for much longer.
Many local social media platforms and internet firms have continued to change their regulations to restrict and, in some cases, prohibit NFT platforms from their networks, alleging a lack of legal clarity but, more importantly, fearing a government crackdown on their day-to-day operations.
Similarly, the Ant Group-backed WhaleTalk, a digital collectibles platform, raised the penalty for people who use its over-the-counter desk for NFT trading in a recent policy modification.
When it comes to NFTs in China, uncertainty reigns supreme.
While the use of cryptocurrencies is forbidden in mainland China, the Xi Jinping administration has previously said that NFTs would not be banned. The fact that Chinese business behemoths like Tencent and Alibaba have registered for a number of new NFT patents in the past year demonstrates this.
However, like with any rapidly developing sector, the rising popularity of digital collectibles in China has led to several price speculations and consumer fraud cases. Too far, the rise in illegal transactions and bot purchases related to NFT platforms has forced certain internet corporations to implement preventive steps that are apparently in their best interests.
After China’s broad crypto ban in September, it was uncovered that certain local firms were nonetheless facilitating crypto transactions. As a result, WeChat and WhaleTalk’s actions seem to be very sensible, especially considering that they are most likely aiming to avoid Chinese government regulatory concerns.
Finally, although NFTs are not legally illegal in China, people are prohibited from participating in any form of speculative trading with digital collectible-derived tokens, putting NFT issuers and owners in a bind.
While the Chinese government is hostile to digital currencies, Haris Sevinç, chief technology officer of The Unfettered, a blockchain game based on NFT and metaverse concepts, believes that the country’s obsession with blockchain technology has allowed investors to continue to harness the power of non-crypto technologies like NFTs.
He believes that big internet companies are modifying their policies to avoid regulatory action, since opposing the government would almost surely result in a fine or a ban. Sevinç went on to say:
“Because the NFT ecosystem is still in its infancy, most regulators are just now warming to the idea and evaluating its potential.” These internet giants [Tencent and Alibaba] will be among the pioneers of China’s Web3 future if authorities embrace a pro-growth regulatory stance in the NFT business. Patent bets will continue to stream in such a circumstance.
Not everyone agrees
In contrast to Caselin’s assertion that NFTs are on a short leash in China, Vijay Pravin Maharajan, the founder and CEO of bitsCrunch, an NFT-focused analytics firm, told Cointelegraph that the list of NFTs transacted in yuan is growing and that the Chinese government will soon accept the asset class.
“The industry is viable because of the stringent rules and agreements that control NFTs and digital collectibles. The Chinese government is working to ensure that NFTs are safe and regulated. Without a question, [China] is the global leader in blockchain technology. As a consequence, we could receive a sneak glimpse of Web 3.0 from them shortly.”
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