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China’s Hainan to Boost NFT Oversight as Digital Yuan Trial Ramps

The market regulator in Hainan intends to encourage NFTs as a component of the digital economy, but will aggressively fight to eliminate rogue actors and speculative activity.

Authorities in the southern Chinese province of Hainan have pledged to tighten monitoring of the nonfungible token (NFT) industry in order to “support the healthy growth” of the sector and to combat fraud and other associated hazards.

Separately, the People’s Bank of China (PBoC) said that it is developing additional features for its Central Bank Digital Currency (CBDC) pilot program, often known as the digital yuan or eCNY.

In a public notice published on Jan. 29, Hainan’s market regulator and nine other provincial authorities established a comprehensive plan to address the NFT industry in the future.

According to a translation of the paper, the regulator is emphasizing the promotion of NFTs as a component of the digital economy, particularly as a means of attracting foreign investment in the Hainan Free Trade Port.

The province authorities, on the other hand, stated that they seek to supervise the NFT market in a way that limits “market instability” such as false information, speculation, copyright theft, fraud, money laundering, and bogus value.

Some of the proposed actions include “severely” cracking down on false propaganda within existing frameworks like the “anti-unfair competition legislation,” preventing copyright infringement by directing and pressing internet companies to delete such information, and cracking down on fraud.

An emphasis has also been placed on educating the public by transmitting the sector’s “risks and rules” so that they “buy prudently” and prevent losses caused by excessive speculation on NFTs.

The Chinese government has taken an unusual stance on the NFT sector since its rise to prominence; while the asset class has not been subjected to sweeping restrictions, as private cryptocurrencies have, state officials have frequently been quick to discourage any form of speculative conduct.

The People’s Bank of China (PBoC) wants to add additional features to its long-running pilot trials of the digital yuan, according to a statement posted via Baidu on Jan. 30.

The bank stated that it is working on a QR code-based transaction system so that “consumers can scan with one code'” to make the CBDC more user-friendly.

It also stated that such technological integrations will assist China in “realizing the connectivity between the digital renminbi system and traditional electronic payment instruments.”

Another promised advantage of the QR code system is that retailers would be able to “support multiple transactions” while keeping customer expenses low.

The PBoC stressed that by 2022, it will have piloted the CBDC in 17 provinces and implemented around 30 “envelope operations” in which it would airdrop tiny quantities of the asset to residents.

The program was meant to promote asset utilization, notably rewards for “low-carbon travel” such as public transportation.

The eCNY network underwent a significant update earlier this month with the introduction of smart contracts.

According to a report from local crypto media site 8btc, smart contract functionality has been deployed via Meituan’s food and retail delivery service.

A smart contract is triggered and searches for keywords and purchased products in a user’s order when they place an order and pay with their e-CNY wallet. If a customer purchases something from the list of keywords for the day, they are entered to win a share of a $1,300 reward.

 

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.