In China, non-fungible tokens are subject to very different rules. ― Shutterstock pic via ETX Studio

Saturday, 16 Jul 2022 9:12 AM MYT

SHANGHAI, July 16 ― In China, NFTs have properties far removed from what we know in the West. In order to avoid the speculative excesses of cryptocurrencies, these “digital collectibles” ― the name given to NFTs in China ― are required to respect certain rules, such as copyright and a ban on resales.

Although it is fundamentally anti-cryptocurrency, China is nevertheless developing “digital collectibles,” aware of the financial opportunity that this industry can represent. For the moment, non-fungible tokens exist in a kind of gray area. The government has not decided to ban these assets, as long as this technology does not facilitate cryptocurrency transactions. Despite that, they remain heavily regulated and must meet a number of requirements.

In the West, an NFT is located on a public chain of nodes, open to all, and thus guaranteeing the integrity of this data. Everyone can therefore participate in the construction of a network, read the data of a digital work or make transactions on the blockchain. Moreover, the network is decentralised, meaning that it is not governed by an institution or an owner. In China, such “digital collectibles” are only available on private blockchains that form part of China’s own blockchain network, developed specifically by the country.

Avoiding speculation

Another major difference that could be of interest to many Western artists is the obligation to have work go through a content audit before publication. This kind of “copyright” process allows many artists to sell their works directly on the different platforms. However, the system is still not perfect and many artists have reported incidents.

Obviously, payments in cryptocurrency are prohibited, and only transactions in yuan are allowed for the moment. Moreover, once the digital object is acquired on an exchange platform, it is impossible for the new owner to resell it. It is therefore difficult to acquire a work of art for the purposes of speculation. However, it is possible to sell certain objects after having fulfilled a holding period.

The works are mostly related to Chinese cultural heritage, with different historical figures or various symbolic places that are meaningful for the country’s inhabitants. Moreover, China is transforming the cultural collections of its museums into digital objects. The objective is to make its art and culture more accessible while creating new sources of income for its museums.

“Digital collectibles” are supported by various major Chinese technology giants, such as Alibaba and Tencent. As a sign of their appeal, the number of platforms dedicated to NFTs has increased fivefold since the beginning of 2022. There are no less than 500 exchange platforms currently in operation in China, according to a report relayed by a Chinese newspaper in June. ― ETX Studio