China issues warnings and guidelines against the use of NFTs

China issues warnings and guidelines against the use of NFTs

Crypto news: China’s stance on cryptocurrencies has long been the subject of speculation and intrigue. Long after the Chinese government banned banks from offering services related to cryptocurrencies and cracked down on local crypto exchanges back in 2021, China’s main national prosecution agency has issued a warning against the use of non-fungible tokens (NFTs) and outlined a set with guidelines to be followed.

China says NFTs have crypto-like attributes

On Wednesday, China’s top economic watchdog – the People’s Republic of China’s top law enforcement officer – warned that digital collectibles such as NFT collections share the “attributes of virtual assets” currently banned in the country. The agency published its guidelines for handling NFTs, suggesting improved risk analysis and decision-making as well as fair penalties for violations.

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According to the official statement released by the prosecution, the national agency is closely monitoring the rise of NFTs in the country as it has the potential to cause financial risk, management risk, breach of network security and especially give rise to legal concerns.

Threatening an NFT ban in China?

Using NFTs, real or virtual goods can have their ownership history verified and stored on a blockchain. Chinese prosecutors, on the other hand, argue that especially with regard to digital art – which can still be copied and circulated – owners cannot truly “enjoy” their possessions. The agency was quoted as saying:

What consumers enjoy is only an exclusive right to prohibit others from tampering with the ownership of NFT registered on the blockchain.

But considering its longstanding opposition to cryptocurrencies, China is reportedly showing renewed interest as it looks to use blockchain technology to expand its digital infrastructure. China recently introduced its own CBDC, which has been particularly effective.

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Furthermore, the agency highlighted the fact that “as a new application of blockchain technology, NFT has a certain development potential”. Therefore, it remains to be seen whether China will outright ban NFTs or attempt to regulate them in a controlled manner. As the NFT market develops and matures, global observers will be closely watching developments from China, as their decisions will have a profound impact on the wider NFT ecosystem.

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