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However, there has always been a sense of uncertainty in the industry: As with all young tech creations that don’t conform to traditional regulatory frameworks, the countdown to when the Chinese government will step in has started early. Since 2017, China has taken a stand against crypto like no other in the world. Chinese financial and cyber regulators have yet to completely ban NFT trading, but the silence casts a long shadow on the business.
This new joint statement is not an official statement from the government, but it is close. “While the pledge letter does not have any legal effect, it is somewhat binding on the members of these three associations,” says Jay Si, Shanghai-based attorney at Chinese law firm Zhong Lun.
NFT industry players are trying to stay on the safe side while the government is quietly contemplating its move.
For example, NFT platforms owned by leading Chinese technology companies do not use the term “NFT” anywhere. 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 private company-owned blockchains that are not completely transparent to the public. Collectors must purchase them in government-issued currency and resale is not permitted.
Alibaba, for example, launched its NFT app Jingtan in December, and now it releases NFTs as often as it does every day. These limited edition offers – often 10,000 copies of famous Chinese artworks or digital native artists’ work – are priced at no higher than $5. Buyers may need to click in milliseconds to secure their purchase, but it doesn’t cost much. And once they have it, they have to wait six months to “gift” the item to another user, which means they’ll have to wait another two years before gifting it again. Last year, Alibaba banned its second-hand market from listing any NFT products. Because of these rules, NFTs have no official resale value, so they don’t work as a financial investment.
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