The popularity of nonfungible tokens (NFTs) is rising as recent data shows that the number of digital collectible platforms in the country has grown to more than 500. The number of NFT platforms jumped from just over 100 to more than 500 in several months.
The sharp rise in the number of platforms comes amid the growing hope as well as popularity of NFTs in China. Tencent and another tech giant Alibaba have shown interest in the nascent space and have filed multiple trademark patents.
The rise in interest in NFTs in the country comes in spite of several warnings from local authorities from time to time. Authorities believe the Chinese NFT market is filled with speculations with a focus on the secondary market that poses inherent risks for investors.
Nonfungible tokens and locals
Nonfungible tokens also became a way for citizens to express themselves digitally during the strict Covid-19 lockdowns in the country. For example, Shanghai’s residents listed hundreds of NFTs on OpenSea in May at the peak of the government lockdown.
Due to a lack of regulatory supervision, individuals and companies continue to engage with NFTs but with an exemplary approach to avoid any direct conflict with authorities. Recently, the tech giant Alibaba launched a new NFT solution and then promptly deleted all mentions of it online.
Its affiliated companies such as Tencent Holdings and Ant Group have moved to avoid any potential regulatory pushback in the past by branding their listed NFTs as “digital collectibles.” Notably, they are also offered on private blockchains and are traded/purchased using Chinese fiat currency.
Moreover, a number of internet giants and leading social media platforms in the country are conflicted over regulatory clarity on nonfungible tokens.
Government and legal aspects
Several months ago, major social media platforms and internet giants updated their policy to restrict or remove NFT platforms, citing a lack of regulatory clarity and fearing a government crackdown.
For instance, WeChat reportedly removed several digital collectible platform accounts for violations of the rules. Moreover, a digital collection platform, Xihu No.1, one of the hyped NFT projects in the market, was among the removed platforms.
That is not the end of the story, as another platform called Dongyiyuandian revealed that its official app has been banned, according to a local news source.
WhaleTalk also updated its policy in order to increase the penalty for using an over-the-counter (OTC) desk for trading NFTs. It is worth noting that even though NFTs aren’t necessarily banned, any form of speculative trading associated with the digital collectible derived tokens is still prohibited.
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The strict position of the country’s government towards the crypto market is well known; nevertheless, the ban on decentralized tech has proved futile. Besides, the crypto mining ban, which once led to a 50% decline in the BTC network hash rate, couldn’t eradicate the mining industry in China. At the moment, the country is back in the second spot after the U.S. in terms of hash power contribution to the Bitcoin network time2business.