Chinese Companies Issuing NFTs Avoid Sanctions by Not Linking to Crypto
Chinese video platform Bilibili has become the latest giant company to implement Non-fungible Token (NFT) technology in China. The company joins Alibaba Group Holding and Tencent Holdings as the leaders in the NFT space in China. However, mindful of the regulations in China, these companies are carefully avoiding the linking of their NFTs with any form of cryptocurrency. Rather, they are issued in the form of “Digital Collectibles”.
The 2021 NFT explosion
NFTs exploded in 2021 as a major aspect of blockchain implementation. It became an avenue to unlock erstwhile trapped value in digital content. Beeple’s artwork, “EVERYDAYS: FIRST 500 DAYS” which was auctioned on the popular digital auction platform, Christie’s, sold for a record $69 million, representing the biggest ever NFT sale.
Throughout the year 2021, several big NFT sales were recorded, while novel marketplaces emerged where users all over the world bought and sold unique digital content.
As a product of blockchain technology, the majority of the NFT transactions recorded were denominated in cryptocurrencies. This led to a popular assumption that NFTs was a form of cryptocurrency. This is not true, even though cryptocurrencies could provide unmatched flexibility for transacting in the blockchain space.
The models adopted by the Chinese giants venturing into the NFT marketplace emphasize this point. As a result of the regulations in China, linking their products with cryptocurrencies is not permitted, however, this does not stop the platforms from offering relevant services in this area and allowing users to achieve value for their digital content.
Bilibili joins Alibaba and Tencent in China’s NFT space
With its headquarters located in Shanghai China, Bilibili is a Chinese video-sharing website. The Bilibili platform is themed around animation, comics, and games. Users on Bilibili can submit, view, and comment on tons of videos. They can also access and download mobile games, most of which are ACG-themed.
In the first week of 2022, the video platform added digital collectibles in the form of NFTs to its offerings. Bilibili opened the opportunity for users to sign up and win one of 2,233 profile pictures, each of which has a unique design and code, and is stored on the company’s blockchain, UPowerchain. These pictures are represented as unique cartoon pigeons.
Bilibili’s implementation joins the likes of Alibaba and Tencent, both of which have since launched and started issuing digital collectibles in the form of NFTs. Alibaba’s NFT marketplace was launched in August 2021. It was created as a platform that will allow customers to purchase and sell NFTs. The marketplace also enables users to license and sell intellectual property (IP) that is copyrighted by blockchain technology.
According to reports, Alibaba’s NFTs are minted on what they called the “New Copyright Blockchain”. The blockchain is said to be operated by the “Sichuan Blockchain Association Copyright Committee”.
One month after Alibaba’s announcement, Tencent, another Chinese tech giant, announced its partnership with the Dunhuang Academy to digitize the landmark wall paintings of the Mogao Caves, a UNESCO world heritage site in China’s Gansu province. This marked the company’s entrance into the NFT space, where it plans to issue 9,999 pieces of NFTs on its permissioned blockchain Zxinchain that each digitizes a unique painting from the Mogao Caves.
Avoid crypto to be safe in China
The three tech giants listed above are providing NFT services in China using creative methods that protect them from the regulative scrutiny of the Chinese government. In October 2021, both Alibaba and Tencent rebranded their NFT offerings, describing them as “Digital Collectibles”. This is an approach that has also been adopted by Bilibili. This will ensure that the companies do not go against the regulatory boundaries of China who have clearly expressed rejection towards anything related to cryptocurrencies.
China frowns at cryptocurrencies but highly encourages blockchain adoption and implementation. Therefore, as long as innovators stay away from cryptocurrency usage, blockchain opportunities can be explored in one of the most industrialized and tech-exposed nations of the world.