Non-fungible tokens (NFTs) are growing in popularity as recent data shows that the number of digital collectibles in China has grown to more than 500, a 5-fold increase from February 2022, when the total number of NFTs was just over 100.
According to a report in a local Chinese daily, the sharp rise in the number of NFT platforms comes amid the growing hype and popularity of digital holdings in the country. Big tech giants including Tencent and Alibaba have shown interest in the emerging space and have filed multiple patents for brands.
The surge in interest in digital collectibles in China comes despite numerous warnings from local authorities. Government agencies believe that the Chinese NFT market is riddled with speculation with an emphasis on the secondary market, which poses inherent risks for investors.
NFTs have also become a way for people to express themselves digitally during the strict COVID-19 lockdowns in China. Shanghai residents registered hundreds of NFTs at Opensea in May at the height of the government shutdown.
Due to the lack of regulatory oversight, individuals and companies continue to deal with digital holdings but with a cautionary approach to avoid any direct conflict with the authorities. Recently, Alibaba launched a new solution for NFT and then immediately deleted all references to it online.
Alibaba affiliates such as Ant Group and Tencent Holdings have moved to avoid any potential regulatory opposition in the past by classifying listed NFTs as “digital holdings”. It is also offered on private blockchains and traded/purchased with Chinese fiat currency.
Related Topics: China-based regulatory and trade associations target NFTs in latest risk notification
Likewise, many internet giants and leading social media platforms in China are conflicted about regulatory clarity on NFTs and have decided to remove many marketplaces from their platforms out of fear of a government crackdown.
The Beijing government’s tough stance on the cryptocurrency market is well known, however, the ban on decentralized technology has proven ineffective. The ban on crypto mining, which previously led to a 50% drop in the hash rate of the BTC network, could not completely overwhelm the country’s mining industry, and currently, China is back in second place after the United States in terms of the contribution of hash power to the Bitcoin network (BTC). ).