FOMO on NFTs is among China’s tech giants

    A group of Chinese industry organizations issued a warning in mid-April about the financial risks of non-fungible tokens, which are digital assets that represent real-world objects or intangible goods like music, and thus, having a FOMO on NFTs. According to the country’s banking, internet finance, and securities bodies, NFTs cannot be traded with cryptocurrencies or used to generate securitized products.

    Despite the fact that industrial associations do not have regulatory authority, they have an impact on policymakers and are taken seriously by them. The announcement has been interpreted by many in the crypto sector as a death knell for the development of NFTs in China. Surprisingly, China’s tech behemoths are displaying an increasing interest — or, as some would put it, FOMO — in the industry.

    Crypto illegal in China

    Because crypto trading is illegal in China, NFTs are restricted in the country. To distinguish their initiatives from the financial and speculative aspects of many NFTs, tech companies refer to them as “digital collectibles,” emphasizing the technology’s role in verifying ownership and authenticity. As a result, many of the Chinese coins are pieces of art, such as an old Chinese Buddhist statue or an object with historical or cultural significance, such as a renowned Chinese starship.

    The importance of NFTs, according to the financial associations, resides in their ability to encourage the expansion of the creative and cultural industries.

    Tech giants controlling the Chinese crypto space

    Digital collectibles generated in China are minted on permissioned blockchains administered by Chinese tech giants and typically marketed through these corporations’ own channels, unlike NFTs, which are minted on Ethereum or other public chains and exchanged with crypto on open marketplaces. Users would have to prove their genuine names on these platforms before purchasing collectibles in China’s fiat currency, the yuan, and resale of the works on secondary markets would be outlawed.

    Because of Chinese regulations, digital collectibles are distinct from the global NFT market and are particularly illiquid. Some systems allow owners to give up their assets for free, but only after a few months of ownership.

    Major players in the space

    Nonetheless, Chinese tech behemoths have hastened to develop digital collectibles, with some even venturing beyond the country’s borders to sell NFTs. We’ve compiled a list of some of the most important participants in the space thus far:

    • Whaletalk is Alibaba’s fintech affiliate Ant Group’s primary digital collectible service, launched in mid-2021. AntChain, is a distributed ledger that requires permission to join (also known as a consortium or alliance chain) that is cooperatively administered by Ant and its institutional partners, and is where the artworks are created.
    • Alibaba’s meal delivery service, which is an all-encompassing platform for Chinese customers to order on-demand services and now buy food-themed digital collectibles, added a digital collectable service to its app in April.
    • Tencent released Magic Core on Zhixin Chain, a consortium chain constructed by Tencent and its partners, in August of last year. The most significant application of Zhixin Chain has been to use blockchain to replace physical ink seals or corporate stamps for document authentication.
    • In December, unveiled its own Lingxi platform, which runs on the Zhizhen Chain, a consortium chain it owns.
    • In April, Baidu, China’s search engine and autonomous driving behemoth unveiled a Space Day-themed collection on its Xuperchain consortium.

    Going aboard

    Some Chinese tech behemoths have expanded their NFT ambitions internationally, or at the very least have expressed great interest.

    • Bilibili, a famous user-generated video streaming site in China, announced this week that it will release a collection of 10,000 unique profile photographs through its third-party partner CryptoNatty, a Singapore-based startup. CryptoNatty, which will mint the graphical avatars on Ethereum, has “licensed” the company’s intellectual property. Given that the majority of Bilibili’s users are in China, it’s unclear how the two companies would split the money or who the target audience would be. Bilibili has been contacted for additional information.
    • Huawei tweeted about the Caked Ape collection this week, causing the NFT’s floor price to skyrocket. The cryptically written tweet makes no mention of the Chinese telecom’s behemoth’s relationship with Caked Apes.
    • In October, TikTok, a short video platform owned by ByteDance, released its first NFT collection on Ethereum, featuring Detroit rapper Curtis Roach. The company’s venture has been dubbed “underdelivering” since it allegedly failed to deliver on pledges to collaborate with well-known artists such as Lil Nas X and Grimes.
    • Cai Wensheng, the founder of the Chinese selfie app Meitu, is the country’s most prominent crypto bull. He was not only an early bitcoin investor, but he also decided that Meitu may acquire up to $100 million worth of cryptocurrencies. In March 2021, Meitu purchased the first tranche of bitcoins and ethers for a total of $40 million.

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