Launch of a state-backed NFT marketplace in China

TechInsight360  

 

Non-fungible tokens (NFTs) had gained widespread popularity among both brands as well as consumers. Many of the leading domestic and global luxury brands have launched NFT projects to better engage with their customers while driving the popularity of their brands in a tough and competitive market. Amid the surging popularity, leading tech giants have launched NFT marketplaces over the last two years, thereby allowing Chinese individuals to buy, sell, and trade their digital collectibles. However, unlike the rest of the world, buying NFTs using cryptocurrencies is prohibited in the country.

Read More - Adaptation of NFTs by luxury brands in China

While the Chinese government had banned cryptocurrencies, it has consistently shown interest in the NFT segment. The launch of a state-backed NFT marketplace is a testament to its interest.

  • According to a report published by the Chinese official media source China Daily, the government is planning to launch a new NFT marketplace on January 1, 2023. For the launch of the marketplace, Beijing is expected to hold an opening ceremony in the country. The China Digital Asset Trading Platform has been partially built by the China Technology Exchange, the State Intellectual Property Office, the Chinese Academy of Sciences, and the Beijing Municipal People’s Government.

The state-backed NFT marketplace will enable Chinese individuals and businesses to transact digital collectibles, copyrights, and intellectual property rights. The marketplace will use a blockchain called the China Cultural Security Chain. However, it will rely on the trading instruments and settlements offered by China Technology Exchange.

Read More - NFTs are becoming mainstream amid the rising cryptocurrency adoption in Latin America

TechInsight360 expects a lack of interoperability between the marketplace and other blockchains, due to the negative view of the Chinese government towards decentralized cryptocurrencies. The country, however, had made a significant move towards the protection of digital collectibles.

  • In December 2022, the Hangzhou Court of China announced that digital collectibles are virtual properties and therefore, enjoy protection under Chinese law. Different jurisdictions have opted to place NFTs under property law. In October 2022, Singapore High Court designated digital collectibles as physical property such as fine wine or luxury watches. This trend is projected to further emerge in more emerging markets in 2023, where NFTs are gaining widespread popularity.

Globally, many innovative NFT projects have launched in 2022. Even during the current economic uncertainty, brands and businesses have invested significantly in the space and the trend will further continue in 2023. Over the last two years, industry leaders such as Apple, Starbucks, and Reddit, have launched NFT projects to mark their entry into the segment. The presence of these big corporations explains the growing interest in the space and the future potential of the NFT market.

Read More - Firms are launching innovative NFT marketplaces to serve different industry verticals

From the domestic market point of view, the foray of the Chinese government into the NFT sector will further accelerate NFT adoption among brands and individuals. A favorable regulatory landscape will also lead to greater investment in the space, driving innovation and a competitive landscape from the short to medium-term perspective. This will keep supporting the growth of the domestic NFT market over the next three to four years in China.

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