Of course, this is not guaranteed. Although NFT-specific regulations have not yet been promulgated in China, the risk of this happening is high. “Blockchain, telecommunications, cryptocurrency, art auctions: there are strict national regulations every step of the way. I believe the government will take action as soon as illegal practices emerge,” said attorney Jay Si. As of 2021, China has completely banned the production and trading of cryptocurrencies. Since NFTs are based on the same blockchain technology and are often associated with cryptocurrencies, many observers expected NFTs to be bundled with this ban, but this was not the case. NFTs remain in circulation in China, and there are several leading platforms for minting and buying them (but not for trade – see more below), always under the label “digital collectibles” instead of “tokens” to emphasize their non-tradable and non-monetary status. Although the long-term legal status of NFTs in China remains somewhat unclear, this has not stopped companies from successfully using NFTs in marketing campaigns, seemingly without legal problems. We generally think of a decoupling between the U.S. and China. One thing that struck me while leading the France`s digital policy is that with the accumulation of European legislation – GDPR, DSA, DMA, MiCA, cryptocurrency, AI law – the legal framework that affects how applications work and how protocols are designed on a daily basis stretches between the US and the EU. We started with cloud infrastructure in the Schrems II decision.

Now, Musk`s ongoing legal battle with Twitter gives the rest of us a glimpse into that world. Musk`s private text collection released this week is full of tech powerbrokers. While the news is supposed to reveal something about Musk`s motives — and it does — it also says a lot about how things are done and deals are made between some of the most powerful people in the world. Although the long-term legal status of NFTs in China remains somewhat unclear, this has not stopped companies from successfully using NFTs in marketing campaigns, seemingly without legal problems. Recently, Tmall hosted an online event called the Metaverse Environmental Protection Auto Show, which promoted the launch of eight electric vehicle brands, with users able to obtain NFTs of these brands through lottery as part of the promotion. McDonald`s also ran an NFT promotion where customers could use points from the Maimaikazi (麦麦咔滋脆鸡腿堡) chicken thigh burger to redeem a related NFT via the McDonald`s app, WeChat, and Alipay. With this in mind, brands may still be able to successfully use NFTs in their promotions in China, but should exercise caution. Global approaches to NFTs will not work and could be illegal, even if China`s unique NFT ecosystem offers new creative marketing opportunities.

Key guidelines for brands considering NFT campaigns in China include: (i) the use of legally registered Chinese NFT platforms; (ii) describe NFTs in China as “digital collectibles”, not “tokens” and never as “currency”; (iii) permit or promote trade or speculation in NFts or imply that NFTs may increase in value or be used as currency. Nevertheless, the market is full of activity. The fact that NFTs in China aren`t really associated with crypto hasn`t bothered traditional Chinese brands, events, and artists. The 2022 Asian Games, to be held in Hangzhou, China, have released 20,000 NFT torches on Alipay, Alibaba`s payment app. Traditional state-affiliated artists offer their work as NFTs at auctions. Some of the biggest deals, such as the NFT debut of internationally acclaimed artist Cai Guo-Qiang, which sold for $2.5 million, took place in Hong Kong, where crypto transactions are still legal. But this difference is often lost in the hype. Although their declarations have no legal validity, industry associations in China issue standards and self-regulatory statements that can be a precursor or substitute for government regulation.

In April, three banking industry associations issued a statement aimed at “decisively curbing” the financialization of NFTs, meaning financial risks associated with asset hype, money laundering and other illegal activities.