- NFT collections have gained popularity in China ever since crypto trading has been banned.
- China’s top national agency has issued a preventative warning and guidelines regarding NFT usage.
- The guidelines suggest enhanced risk analysis, decision-making and unbiased penalties for crimes.
The highest national agency in China has cautioned that NFT digital collections have the characteristics of virtual assets that the country has banned.
Publishing its own guidelines for the treatment of non-fungible tokens, the Supreme People’s Procuratorate of the People’s Republic of China suggested intense “risk research and judgment” so as to punish crimes in an accurate way.
In 2021, China not only cracked down on local crypto but also stopped banks from providing crypto-based services. This led to the disappearance of the local industry until NFTs entered the picture and began gaining fame in the country as digital collectibles that were different from high-risk crypto. However, the recent post by the prosecution agency warns otherwise.
According to the report, despite their high popularity, they can lead to risks associated with network security, finances, management, and more, specifically legal risks. Prosecutors are taking the matter quite seriously.
NFTs have an exclusive digital identifier for physical or virtual items that enables recording the proof of ownership on a blockchain. China’s prosecution agency believes that holders can’t enjoy ownership, especially of digital art, which can be both replicated and distributed.
One author of the report said that, from a property rights point of view, consumers don’t cherish the ownership of the purchased NFT digital assets in terms of civil law. Also, they can’t forbid others from replicating, accessing, or distributing the digital assets mapped by NFT. All they enjoy includes an exclusive right to prevent others from interfering in the ownership of the NFT that’s recorded on the blockchain.
Though China is reluctant about crypto, it is interested in making the most of the blockchain technology that supports virtual assets to expand its national digital infrastructure. Recently, the country launched its own central bank digital currency, which has been quite impactful too.
The prosecution agency said that as a new application of blockchain, NFT has the potential for specific development. On that note, it remains unclear whether China will ban NFTs or regulate them in a controlled way.