SHANGHAI’S DECISION WILL NOT ALLOW THE EXISTENCE OF GLOBAL NFT MARKETPLACES SUCH AS OPENSEA!
Some Chinese authorities offer recommendations on how to use NFTs most effectively after raising concerns about the financial risks involved with the revolutionary technology. According to the city’s 14th Five Year Plan on the Digital Economy, which was issued this week, pushing companies to explore developing NFT exchanges is something the government of Shanghai encourages.
Although the order isn’t being tested nationally, the largest city in China in terms of GDP and a place recognized for its economic openness might serve as a model for other areas.
The government will use NFTs as a weapon for IP protection, which is still considered lacking in the nation. The city is encouraged to get a head start on studying and promoting “the digitization of assets like NFTs, the worldwide circulation of digital intellectual property, and the digital authentication of ownership,” according to the strategy.
However, Chinese officials have been categorical in their rejection of speculative NFTs. Top financial sector organizations in China urged in April that NFTs not be used for security or exchanged for cryptocurrencies, which are forbidden in the nation.
These proposals effectively rule out the existence of global NFT marketplaces such as OpenSea. However, the country does allow private, consortium blockchains managed by trusted institutions. In addition, Tencent, Alibaba, and Baidu have all built their marketplaces for “digital collectibles.” Secondary trading is prohibited when consumers can only make purchases using the country’s fiat currency.
Blockchain, the distributed ledger technology that underpins NFTs and cryptocurrencies, is also heavily cited in Shanghai’s digital economy blueprint. But, again, that’s to be expected. China has embraced blockchain technology with open arms over the years, with President Xi Jinping personally endorsing the technology.
For starters, the statement refers to the blockchain as an “important technology”. It lists it alongside big data, cloud computing, and artificial intelligence, all of which have had considerable government support.
To “empower” fintech applications, such as employing distributed ledgers and smart contracts to support end-to-end payment transactions, blockchain should be “deeply fused” with AI, big data, and other new technologies. According to the document, blockchain can also be used to facilitate trusted transactions and authenticate identities.