Chinese regulators remain cautious about NFTs, as indicated by recent skepticism expressed by the Supreme People’s Procuratorate. The Supreme People’s Procuratorate highlighted risks associated with digital collectible investments, advising consumers to avoid this asset class. The May 15 report highlighted the risks of NFTs, including unauthorized fundraising, scams, and price manipulation, posing investor risks. This highlights the ongoing concerns and regulatory scrutiny surrounding NFTs in China.

Existence of Counterfeit NFTs

A report from the China Academy of Information and Communications Technology has shed light on the unregulated nature of the Non-Fungible Token (NFT) industry, dubbing it the “wild west” of Web3. Author Wang Xia-fen emphasized counterfeit NFTs that are not minted on distributed ledgers. Wang believes digital collectibles can protect intellectual property, drive content creation, and boost the digital economy. To tap into the potential, the government must distinguish legitimate innovation from illicit activities in the NFT sector.

NFTs Thrive Despite Digital Currency Ban in China

The rise of Non-Fungible Tokens has been on the rise, despite a blanket ban on digital currencies in China. The State Administration for Market Regulation has recorded 59,700 complaints related to NFTs in 2022, with issues such as fraud and high transaction fees. To address these concerns, a report has proposed a major crackdown on criminal activities linked with digital collectibles and urged law enforcement agencies to cooperate with other bodies to conduct proper investigations. The Chinese government allows NFTs in the country as long as users avoid speculative trading. Regulating it is essential to protect investors from fraud and mitigate risks in this emerging asset class.

Collaboration and Self-Regulation

China’s NFT market is experiencing anticipation for significant industry changes due to the growing attention from regulators. In December 2022, an Hangzhou court ruled that NFTs can be legally protected as property in China.

NFTs became a prominent topic during China’s Two Sessions meeting, with lawmakers advocating for broader regulations. While urging regulators to collaborate on establishing new rules, industry stakeholders and NFT firms received active encouragement to foster “self-discipline and self-regulation” within their respective domains.

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Filed under: Bitcoin - @ May 22, 2023 5:16 am