The future of non-fungible tokens is becoming clearer in China as the country’s tech giants come together to formulate standards for the fledgling industry.
China Cultural Industry Association, with Tencent, Ant Group, Baidu and others jointly Published a “self-disciplined development proposal” for the “digital collectibles industry”, a renowned term for NFT in China to remove the financial aspects of the technology.
Although industry associations do not have regulatory power, they can be conducive to the development of standards and best practices within an industry. The China Cultural Industry Association was founded with the permission of the State Council and counts Alibaba and Tencent among its members, according to reports on its website.
NFT enthusiasts in China are watching for regulatory guidance coming from the top. After China prohibits cryptocurrency tradingspeculation was that NFTs in their purest form – traded with cryptocurrencies on global public blockchains, freely and anonymously – would not be allowed in the country.
This seems to be the case. In April, Chinese financial associations proposed that NFTs should not be used for securitization or traded in cryptocurrencies.
China’s NFT industry could move closer to regulation, with the country’s biggest platform operators taking a stand. Collectible digital platforms, according to the proposal issued by Tencent, Ant Group and others, should hold relevant regulatory permissions, ensure the security of underlying blockchain technologies, enforce user real identity checks, strengthen the protection of intellectual property, resolutely prohibit financial speculation, and promote rational consumption among users.
Tech companies in China have been testing the waters ahead of NFT regulations coming into force. Behemoths from Tencent, Ant Group to Baidu have all have launched their digital collection marketplaces built on private consortium chains. Users can only make purchases with Chinese RMB fiat currency, and secondary trading is largely prohibited to avoid price spikes.
One company has decided to take its ambition beyond China to explore the full scope of NFTs. In April, Bilibili, China’s first user-generated video streaming site, commissioned a Singapore-based company to launch an Ethereum-based NFT collection inspired by the site’s brand assets.