China Launches State-Backed NFT Marketplace, No Crypto Allowed

• The Chinese government has announced plans to launch its own version of a state-backed “non-fungible token (NFT)” marketplace on January 1.
• Beijing won’t be using blockchain to power its platform, and it wants to do away with crypto as the marketplace’s currency in favor of fiat.
• Private sector secondary markets for “digital collectibles” exist in China, with the fiat yuan being used in these spaces in place of crypto assets.

The Chinese government has recently announced plans to introduce its own version of a state-backed, non-fungible token (NFT) marketplace. This announcement was made after the Hangzhou Internet Court ruled that virtual items such as NFTs can be legally recognized as property. The China Digital Asset Trading Platform is set to go live on January 1, and it will become an official “secondary market for digital assets that comply with national regulations”.

China has effectively banned crypto trading, so the government is looking to cherry-pick technological advances associated with crypto and the blockchain space by introducing its own version of an NFT marketplace. However, this marketplace will not be powered by blockchain, and crypto assets will not be used as its currency. Instead, the government wants to do away with crypto and introduce fiat as the currency.

Private sector secondary markets for “digital collectibles” already exist in China. In these spaces, transactions are recorded on centralized ledgers rather than public blockchain networks, and the fiat yuan is used in place of crypto assets. Major tech companies have been encouraged to label their products as “digital collectibles” rather than NFTs in an effort to reduce speculation on NFT prices.

All in all, the Chinese government is looking to take advantage of the technological advances associated with the blockchain space while still maintaining a certain level of control over the market. It will be interesting to see how the China Digital Asset Trading Platform performs once it goes live on January 1.