However, there has always been a sense of uncertainty in the industry: as with all young technological creations that do not fit into traditional regulatory frameworks, the countdown began early when the Chinese government stepped in. Since 2017, China has taken an unrivaled stance against cryptocurrencies around the world. Chinese financial and cyber regulators have not yet completely banned the trading of NFTs, but silence casts a long shadow on business.
This new joint statement is not an official statement of the government, but it is close. “Although the pledge letter has no legal effect, it is somewhat binding on the members of these three associations,” said Jay Si, a Shanghai lawyer at China’s Zhong Lun law firm.
As the state silently considers its move, players in the NFT industry are trying to stay on the safe side.
For example, NFT platforms owned by prominent Chinese technology companies nowhere use the term “NFT”. Instead, they call them “digital collectibles.” The idea is that they are not much different from your Funko Pop toys or vinyl collections, except that they are online, on blockchains owned by private companies that are not completely transparent to the public. Collectors must buy them in the national currency, and resale is not allowed.
Alibaba, for example, released its NFT app Jingtan in December and now publishes NFTs as often as every day. These limited edition offerings — typically 10,000 copies of renowned Chinese artwork or works by digital copyright artists — sell for no more than $ 5. Buyers may need to click in milliseconds to secure a purchase, but that doesn’t cost much. And when they own it, they have to wait six months before “giving it away” to another user, who has to wait another two years before giving it away again. Last year, Alibaba banned its own second-hand market from listing any NFT products. Due to these rules, NFTs do not have an official resale value, so they will not work as a financial investment.