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Is China’s fear of banning NFTs a positive indication for investors?

China’s contradictory signals about its local NFT business have investors perplexed about the market’s future prospects.

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#nft #nfts #china

It’s no secret that China despises all things crypto, as seen by its decision to prohibit the entire digital asset market outright last year. Despite the restriction, one segment of the crypto sector has thrived in the region: the nonfungible token (NFT) market. However, this may not remain the case for much longer with recent bad developments.

Many local social media platforms and internet companies have continued to amend their policies to restrict and, in some cases, altogether remove NFT sites from their networks, citing a lack of regulatory clarity but, more crucially, fearing a government crackdown on their daily operations.

For example, WeChat, a Chinese instant messaging and social media service with over 1 billion active users, recently removed Xihu No.1, one of China’s most popular NFT ecosystems, from its platform, citing a violation of its active rules of service. Other projects, notably Dongyiyuandian, were targeted in the same way.

In a similar line, in a recent policy update, the Ant Group-backed WhaleTalk, a collectable digital platform, doubled the penalty for persons using its over-the-counter desk for the purpose of NFT trading.

In China, ambiguity reigns supreme when it comes to NFTs

While the usage of cryptocurrencies is prohibited throughout mainland China, the Xi Jinping dictatorship has shown no intention of prohibiting the use of NFTs until recently. The fact that Chinese commercial behemoths like Tencent and Alibaba have applied for multiple new NFT patents in the last year exemplifies this.

However, like with any growing market, the increased popularity of digital collectibles in China has led to severe price speculation and consumer fraud incidents. To date, the rise in unlawful transactions and bot purchases associated with NFT platforms has prompted numerous digital behemoths to take preventative steps that are likely in their best interests.

In fact, numerous local firms continued assisting crypto transactions after China’s blanket crypto ban was announced last September. As a result, WeChat and WhaleTalk’s actions appear to be legitimate, especially given that they are most likely attempting to escape any regulatory attention from the Chinese government.

Finally, while NFTs are not necessarily outlawed in China, its residents are prohibited from engaging in any type of speculative trading involving digital collectible-derived tokens, putting NFT issuers and owners in a difficult position.

Experts weigh in

Tencent and Ant Group’s shift in policy on how their users interact with NFTs is not surprising, according to Philip Gunwhy, partner and brand strategist for prominent NFT platform Blockasset.co, who added: “In order to gain a competitive advantage within the confines of China’s existing legislative framework, tech giants must reposition their platforms.”

“The government has not yet made NFT trading illegal, as the laws are still being ironed out. Even if Chinese authorities do eventually restrict NFTs, innovators and investors would benefit because it took nearly a decade for the government to finally outlaw Bitcoin mining and crypto transactions on its soil. The NFT market is constantly expanding, and patent filings from big internet businesses in China should be regarded seriously.”

The fact that the government has not restricted interaction with NFTs, despite their current popularity, shows that the approach taken with cryptocurrencies may be significantly different, according to Gunwhy. “In any event, Chinese officials are keeping a careful eye on the progress of NFTs,” he stated.

While the Chinese government is hostile to digital currencies, Haris Sevinç, chief technology officer of The Unfettered — a blockchain game based on NFT and metaverse concepts — believes that the country’s obsession with blockchain technology has allowed investors to continue to harness the power of non-crypto technologies like NFTs.

He believes that large internet businesses’ actions to change their rules are purely motivated by a desire to avoid regulatory action because defying the government will almost certainly result in a fine or a ban. Sevinç continued:

“Because the NFT ecosystem is still in its early stages, most regulators are only warming up to this idea and trying to assess its prospects. If authorities implement a positive form of regulation in the NFT space, these tech giants [Tencent and Alibaba] will be among the pioneers of the future of Web3 in China. In that case, the patent bets will keep coming in.”

In China, the future of NFTs could be shattered

According to Ben Caselin, head of research and strategy at crypto exchange AAX, “NFTs are relatively tolerated in China” at the moment and are being classified and sold as digital collectibles. “These are issued on more restrictive hybrid or permission blockchains,” he explained, “which preclude holders from speculating on secondary markets.”

While these domestic markets may prosper for a time, permission NFTs, in Caselin’s opinion, lack many key features or advantages, such as ownership, and hence do not profit from the same dynamics as mainstream NFTs.

When it comes to the Chinese market, Jake Fraser, head of business development at Mogul Productions, a decentralized film funding and movie-based NFT platform, believes there are still plenty of opportunities:

“There will always be regulatory changes and firms revising their practices, but innovation will continue to happen.” Gamification is one area of their NFT industry that is gaining traction. It’ll be interesting to see how this plays out in different scenarios.”

Finally, Fraser stated that trading NFTs is still a fresh concept around the world and that no countries have implemented real rules to date. Although like with initial coin offerings, he believes law is unavoidable, he believes the advances will be “quite positive for the sector” as long as innovation is not impeded.

Not everyone is in agreement

Despite Caselin’s claims that NFTs are on a short leash in China, Vijay Pravin Maharajan, the founder and CEO of bitsCrunch, an NFT-focused analytics firm, told Cointelegraph that the list of NFTs being transacted in yuan continues to grow, and that the Chinese government will soon accept the asset class.

“The market is feasible because of the strict laws and agreements that have been formed surrounding NFTs and digital collectibles. The Chinese government is working to make NFTs as safe and regulated as possible. There’s no doubting that [China] is a pioneer in the field of blockchain technology. As a result, we may soon see a glimpse of Web 3.0 from them.”

According to Maharajan, China is embracing NFTs by making its infrastructure “independent of cryptocurrencies,” contrary to popular belief. He argues that disrupting the existing NFT framework and adopting a new business model is acceptable because these services are unique and may be minted, distributed, and transacted in a variety of ways. “Even though it may appear to be a slow start,” he said, “we are seeing a positive trend with the acceptance of NFTs so far, regardless of crypto restrictions and their consequences.”

As we go into a future dominated by decentralized technologies like NFTs, it will be interesting to see how China, as a key financial mover and shaker, continues to evolve its digital worldview and regulate these assets.

NFT

At a London event, an NFT vending machine will increase accessibility to digital art

The NFT vending machine at this year’s NFT.London event will give its profits to a good cause.

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The first-ever physical nonfungible token (NFT) vending machine will be on display at this year’s NFT.London conference, which is set for November 2-4.

The NFT platform aims to give anyone who wish to start buying and trading digital assets a simple and accessible way to do so without requiring them to have a thorough understanding of the Web3 sector. Users won’t need to have a digital wallet to buy an NFT from the vending machine.

Users must choose one of the shown envelopes before entering the code to acquire an NFT from the myNFT vending machine. After making their purchase, users can scan the QR code on the envelope to access an invitation to create a myNFT account, which includes an NFT wallet where they can store their NFT.

“The most convenient method to buy anything is through a vending machine, so we’re shattering the impression that buying an NFT is difficult with this campaign,” said Hugo Mcdonaugh, CEO of myNFT.

The first collection of contributed NFTs from myNFT, which includes names like Dr. Who Worlds Apart, Thunderbirds, and Delft Blue Night Watch, will be available for purchase by interested participants.

The actual NFT vending machine will be situated outside the Queen Elizabeth II Centre, Westminster, London, which is where the NFT.London conference will take place.

The revenue from the NFT vending machine will go to two charities: Roald Dahl’s Marvellous Children’s Charity, which provides specialized nurses to seriously ill children, and Giveth, a blockchain-based philanthropic community that supports public goods, services, and education in developing countries.

The Solana, California-based NFT marketplace Neon introduced a 24-hour NFT vending machine in the financial sector of New York City in February, according to Cointelegraph. This machine took credit and debit card payments. However, people complained that neither the NFT vending machine nor the NFT performed as promised after a week had passed after its introduction.

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Could this trademark application indicate that PayPal is developing an NFT market? 

A trademark application for blockchain and cryptocurrency technology has been submitted by PayPal. Some claim that the file has something to do with Web3 and the metaverse, although it may be tied to an NFT marketplace.

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A recent trademark application by PayPal has been found, and it suggests the development of a service pertaining to several facets of blockchain technology. The file, which was made on October 18, makes a notable allusion to the potential introduction of a non-fungible token (NFT) market.

For its logo, PayPal submitted two trademark applications. The first one concerns “downloadable software” for cryptocurrency trading and storage. The second discusses cryptocurrency-related payment processing services.

Although users may currently buy cryptocurrencies on PayPal’s platform, this filing suggests that there may be more to come. The concept of assets is substantially broader in the filing’s terminology. Mike Kondoudis, a trademark lawyer licensed by the USPTO, claimed on Twitter that this filing relates to NFTs and the metaverse.

Although there is no proof to support this, it would not be shocking if it were true. The finance business would be adding its name to a lengthy list of businesses that are starting to make inroads into the Web3 and metaverse spaces.

PayPal is investing more in cryptocurrency.
Over the past two years, PayPal has intensified its focus on cryptocurrencies. First, the company made a huge announcement for the industry by saying that consumers would be able to purchase cryptocurrency on its platform.

However, it didn’t start enabling users to move those funds into wallets outside of the network until recently. It indicated that it would roll out additional crypto-related features in the latter part of last year. One of those additions might be an NFT marketplace.

It teamed up with Coinbase’s TRUST network more recently. This was viewed by many as an endorsement of the sector. The TRUST network upholds consumer security and privacy while adhering to the banking industry’s Travel Rule.

Increased Criticism of Payment Giant
Additionally, PayPal has been in the spotlight for all the incorrect reasons. The business has recently come under fire for a contentious policy that penalized users for disseminating false information. Later, it claimed that false information was released with the amended policy. Crypto aficionados, however, were eager to point to this as evidence of the value of decentralization.

PayPal established a blockchain and cryptocurrency advisory committee earlier this year. According to the company’s management, working with governments is essential to overcoming obstacles and seizing possibilities.

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Seba Bank, a cryptocurrency company, aims to store valuable NFTs

Seba Bank, a cryptocurrency company, has launched its first NFT service, a blue-chip NFT-specific institutional-grade, certified, and independently audited hot and cold storage custody product.

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The launch comes in response to requests from customers to keep their NFTs with the bank alongside other crypto assets, such as the already-approved Bored Ape Yacht Club, Cryptopunk, and Clone X NFTs. The bank stated that new collections would be added based on customer demand.

With its newest offering, Seba Bank seeks to entice investors who view NFTs as an asset class and crypto natives. Not your keys, not your bitcoin is a well-known phrase in the crypto sphere, and adherents of this maxim could object to having their Apes or Punks stored with a third-party custodian.

Urs Bernegger, co-head of markets and investment solutions at Seba Bank, however, highlights a growing group of NFT holders who are more at ease handing up their NFTs and private keys to a company.

They don’t want the key because they aren’t even aware of how to handle and store it. He claimed that they’re more concerned with damaging the key than giving it to a bank.

It’s a significant issue. Between 2.3 million and 3.7 million bitcoins, according to Chainalysis, are trapped in inaccessible wallets. Numerous accounts of people have lost millions owing to losing private keys, including Russian officials, students, and engineers. Families have also been prevented from accessing substantial quantities of money following sudden deaths in which wallet owners had not disclosed their private keys.

Bernegger asserts institutional custody can be advantageous for native crypto users as well. There has been an increase in businesses providing services that employ NFTs as collateral for conventional banking services like loans.

Seba Bank is thinking about implementing these features in the future. Based in the crypto-friendly Swiss town of Zug, the four-year-old bank already backs several investing, credit, lending, and staking options for cryptocurrencies and might extend them to NFTs.

“Instead of traveling to the market, for instance, we could create a club for collectors and assist them in finding other collectors. There are a few things we have in mind, but we laid the groundwork by storing NFTs securely at first, “explained he.

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