China Wants NFTs, But On Their Own Terms: Decoding Digital Collectibles
China's stance on NFTs is complex. While the global NFT market booms, China is carving its own path, seeking to harness the technology without embracing the decentralized nature and cryptocurrency ties that define the space elsewhere. In China, NFT are referred to as ‘digital collectibles’ rather than ‘tokens’ since the Chinese government is opposed to cryptocurrency. A cryptocurrency is a digital or... and that's precisely what they're trying to avoid.
Digital Collectibles, Not NFTs: A Key Distinction
The key difference lies in the underlying infrastructure. In China, tech giants hoping to hop on the bandwagon have issued their own NFTs, while emphasising they're not linked to cryptocurrencies, which are banned in the country. These 'digital collectibles' operate on permissioned blockchains, often controlled by these very tech giants. This allows the Chinese government to maintain control and prevent the speculative trading rampant in other NFT markets.
Chinese Tech Giants Lead the Charge
Tech giants Alibaba, Tencent, and Bilibili, among others, all have their own ‘digital collectibles’ but have banned the reselling of NFTs amid a tough regulatory environment. These companies are exploring applications for NFTs in various sectors, including art, gaming, and even brand loyalty programs. However, the focus remains on utility and ownership rather than investment and speculation.
Regulatory Scrutiny and Control
Yet while its role has traditionally been to control the internet domestically, the Chinese state is now taking further steps to curb the influence of international blockchains. The Chinese government is implementing stringent regulations to prevent the flow of cryptocurrency into the country and to ensure that all digital collectibles adhere to its strict content guidelines. This includes limitations on reselling and restrictions on the use of cryptocurrency to purchase these assets.
The Future of NFTs in China
While the future is uncertain, one thing is clear: China's approach to NFTs will be fundamentally different from the rest of the world. The focus will remain on controlled, centralized digital collectibles, used for specific purposes within a regulated ecosystem. This distinct approach highlights China's desire to innovate in the digital space while maintaining tight control over its financial system and online environment.