Folkets Dagbladthe mouthpiece of the ruling Chinese Communist Party, has launched an NFT research project to “guide the orderly development of digital art” as the country’s NFT industry remains cautious amid mixed regulatory signals.
A new academy, called the People’s Lingjing Research Institute, has been set up as a joint venture between the newspaper’s corporate unit and Sinofaith, a Shanghai-based intellectual property rights company.
The academy will study legal issues, technical standards and regulatory models for “the process of digitizing works of art”. Folkets Dagblad said Sunday.
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Lingjing, or spiritual terrain, is the Chinese translation of “virtual reality” attributed to Qian Xuesen, known as the father of China’s space and missile programs.
Folkets Dagblad launched Lingjing in January as a vehicle to promote its own digital collectibles, a term used to describe NFTs in China as the latter remain in a regulatory gray area. While global mainstream NFTs trade on public cryptocurrency blockchains, China’s digital collectibles are mostly based on centrally controlled blockchains and sold in yuan.
Through China’s digital publishing system and censorship mechanisms, the academy’s research laboratory will explore the “content regulation model” for issuing digital works of art, and guide the market’s “orderly development”, according to Folkets Dagblad. It will also explore issuing digital collectibles overseas to promote Chinese culture.
China’s major digital collectibles have taken a cautious approach due to Beijing’s blanket ban on cryptocurrencies and repeated warnings from authorities about the speculative risks of NFTs.
Last month, industry players published a “self-discipline initiative” pledging to “firmly resist” speculation while promising identity checks for users and a ban on cryptocurrencies.
The signatories of the initiative included the country’s largest internet companies such as Tencent Holdings, Baidu, JD.com and Ant Group, the fintech affiliate of Alibaba Group Holding, owner of South China Morning Post. To avoid potential scrutiny, large companies also do not allow secondary trading on their platforms.
While underground trading outside of major platforms remains active among digital collectibles enthusiasts, some companies are already finding their NFT operations difficult to sustain due to waning interest and regulatory uncertainty. Tencent plans to shut down its NFT unit Huanhe, local media reported last month.
Nevertheless, the authorities are pushing their own agendas in space. Internet watchdog Cyberspace Administration of China now regularly publishes the names of approved blockchain companies, and of the 348 listed last week, nearly 100 were involved in digital collectibles.
China’s Blockchain-based Services Network (BSN), a state-backed initiative aimed at driving the commercial use of blockchain technology, also operates blockchain infrastructure services without the involvement of cryptocurrencies, including one that allows companies to create and manage their digital collectibles.
In a message that surprised many in the industry, the Shanghai government last month explicitly backed NFTs, saying it would support “leading companies to explore the construction of NFT trading platforms.” It also promised support for Web3, a loosely defined vision of a decentralized internet built around blockchain and often involving cryptocurrencies and NFTs.
But many were skeptical that Shanghai’s political support would produce the sweeping changes that Web3 entrepreneurs need, as Chinese regulators’ vision for the industry differs from those in the Web3 community.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit SCMP’s Facebook and Twitter sides. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
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