May 23, 2023

Chinese Regulators Say NFTs Still Risky as Investment Tool

Chinese NFTs

Chinese NFTs

Chinese regulators are still looking at the NFTs with an eye of skepticism, doubting their potential as an investment tool, Coingeek reported.

The Supreme People’s Procuratorate of China issued a publication that sheds light on risks associated with an investment in NFTs, including financial risks, management risks, network security risks, etc., especially legal risks, calling on citizens to stay away from digital collectibles.

The Chinese report pointed to multiple risks that could be resulted from the NFTs, like unauthorized fundraising, price manipulations, fraud, scams, and malicious hype.

Wang Xiafang, one of the report’s authors, highlighted the role of the NFTs in protecting intellectual property rights, promoting the development of cultural and creative undertakings, and enriching the digital economy, however, she asserted the importance of the government’s crackdown on criminal activities committed under the guise of new technologies and new formats.

Wang affirmed the necessity of cooperating with administrative agencies to carry out traceability governance and comprehensive governance, guiding administrative agencies to make full use of existing legal regulations and industry norms, and bringing financial activities under the guise of new business forms into supervision.

In March, the State Administration for Market Regulation (SAMR) of China said that Chinese users submitted 59,700 NFT-related complaints in 2022.

According to SAMR’s recent data, this number represented a 30,000% increase compared to the previous year, which witnessed less than 200 complaints related to the NFTs.

The Chinese users mainly complained about the non-delivery of purchased NFTs, charging high fees, non-refunds, strange growing prices, and random banning of consumer accounts. The report pointed to the difficulty of supervising a new field, such as digital collectibles.

Earlier on November 29, the Hangzhou Internet Court ruled that the NFT collections are online virtual property that should be protected under Chinese law. The court said that the NFTs have the “object characteristics of property rights such as value, scarcity, controllability, and tradeability” which should be protected by Chinese law.

The court noted that the NFTs have the value of related intellectual property rights as it reflects the creator’s original expression of art.

Author profile

Whether you want to learn about NFT, Blockchain, Web3.0, Metaverse, or any other emerging technologies, we have the vital resources that will enlighten and help you make an informed decision.