China Launches National Digital Asset Exchange for NFTs, Metaverse – Ledger Insights
China launched a state-sanctioned secondary trading platform for digital assets on New Year’s Day. After concerns about the speculation surrounding non-fungible tokens (NFT), the four tech giants Tencent, Ant, Baidu and JD themselves imposed a ban on secondary trading of digital collectibles by mid-2022. The new national trading venue only has a direct registration process, so it remains to see what kind of intellectual property is supported, with the platform’s innovation working group made up of museums, tourism organizations and rights holders.
The state-owned China Digital Assets Trading Platform was jointly established by China Technology Exchange, Cultural Relics Exchange and Copyright Service Center with the aim of standardizing the trading process to curb speculation.
One of the drivers is that China recognizes that digital assets will be important to the development of the metaverse, whether avatars, clothing, art or museum objects. In addition to the innovation working group, there is a metaverse working group that includes local authorities and state enterprises.
In the past, the Chinese government has repeatedly highlighted the financial risk of NFTs and the speculative nature of the NFT market. Although NFTs are not subject to the same Chinese restrictions as cryptocurrencies, considering the voluntary suspension of secondary trading, NFT services introduced by e.g. Tencent is already decommissioned. However, NFTs are supported on the government-backed infrastructure network BSNincluded for more business-oriented use cases.
With the NFT hype for consumers, it’s easy to forget the more B2B use cases. Asset registration and verification services are common blockchain applications. And that extends to intellectual property, with both Baidu and Ant having previously launched copyright blockchain applications. In November 2022, the patent offices of Poland and Italy joined EUIPO blockchain, which logs registrations and updates of trademarks and design registrations. Similarly, Italy’s music copyright body SIAEworked with Algorand to protect its intellectual property.
However, the digital asset trading platform in China plans to go a step further to act as a credible repository service mechanism for tradable digital assets. Although the full range of services provided by the new trading platform is not detailed, the platform will provide digital asset registration, verification and rights monitoring through the China Cultural Protection Chain. It remains to be seen what restrictions will be imposed on the resale of digital collectibles, given the government’s previous stance on the financial risks associated with speculative trading.
