NFTs heat up in China as ‘digital collectibles’ despite tough regulatory environment banning profits
- Tech giants Alibaba, Tencent, and Bilibili, among others, all have their own ‘digital collectibles’ to cash in on the NFT craze despite government scrutiny
- China’s tough regulatory environment has companies shunning the term NFT and barring users from selling their digital assets for cash
When Simon Gao, an engineer in China’s eastern city of Hangzhou, decided to join a lucky draw to buy a “digital collectible” profile photo on Bilibili last Friday, he did not expect the process to be so difficult.
The video streaming platform set a high bar for potential buyers, requiring bidders to have logged into the site every single day last year. Gao qualified, but he was still unable to get a profile picture featuring cartoon pigeons, which is stored on the company’s blockchain network.
Interest in the booming market for non-fungible tokens (NFTs) is as strong in China as anywhere else these days, but the Chinese government remains wary of the technology. This has led to an unspoken rule among mainland companies to ditch the term NFT in favour of the more neutral term “digital collectible”. Many Chinese tech companies now offer their own digital collectibles on blockchains.
However, the sensitivity over crypto products in China has led platforms to limit how digital collectibles can be traded. Unlike NFTs sold on public blockchains around the world, those minted by Chinese tech firms cannot be resold for profit, a condition designed to assure Chinese regulators that the digital products will not become a tool for speculation and capital flight like bitcoin and other cryptocurrencies.
That has not dampened Chinese consumers’ enthusiasm. Many new digital collectibles minted in China have been sold within seconds after launch.
“You have to be fast enough to get a digital collectible,” said Felix Huang, a graphic designer in the southern tech hub of Shenzhen who has bought 10 digital collectibles. “If you fail to nail the NFT product 10 seconds after it’s released, you’ve almost lost it.”