China's First State-Backed NFT Marketplace Launches

China to Launch State-Backed NFT Marketplace

China is set to launch its first state-backed non-fungible token (NFT) marketplace in Beijing, known as the "China Digital Asset Trading Platform," on January 1st, 2023. This platform will enable users to trade digital copyrights, property rights, and collectibles. Unlike traditional NFT platforms, this marketplace will be a secondary market, operating under strict regulations to limit the nature of digital artwork created on the blockchain.

The Technology Behind the Marketplace

The NFT platform is supported by a blockchain called the “China Cultural Protection Chain.” This is a permission chain, which contrasts with the permissionless nature of traditional NFT blockchains. The initiative is a collaboration between the state-owned Chinese technology exchange, Art Exhibitions China, and Huban Digital Copyrights Ltd, a private entity.

China’s Leading Role in NFT Adoption

Despite the 2021 ban on cryptocurrencies, mining, and exchanges, China has emerged as a leader in NFT adoption. Digital collectibles have gained substantial popularity over the past two years. In a landmark decision, the Hangzhou Internet Court recognized NFTs as virtual property, emphasizing their value, scarcity, and tradeability.

The Highly Regulated Nature of NFTs in China

While NFTs are gaining traction in China, they are traded on closed, regulated platforms. The stringent regulations prevent the use of cryptocurrencies for purchasing NFTs, aiming to curb excessive speculation in secondary markets.

Strategic Implications

The launch of China's NFT marketplace reflects a strategic move to regulate digital assets while fostering their growth. This development underscores China's innovative approach to digital asset regulation, balancing control with technological advancement.