Shanghai gives nod to NFT trading platforms – TechCrunch

After flagging concerns about the financial risks associated with non-fungible tokens, some Chinese authorities are providing guidance on how best to use the new technology.

The Shanghai government says it supports “leading companies to explore the construction of NFT exchanges”, according to the city’s 14th five-year digital economy plan published this week.

Although the directive is not national, what is being tested in Shanghai, the largest Chinese city by GDP and known for its economic transparency, can probably serve as an example for other regions.

The government’s intention for NFTs is clear: to use them as a tool for IP protection, which still has shortcomings in the country. In fact, the plan wants the city to have a head start in researching and promoting “the digitization of assets such as NFTs, the global circulation of digital intellectual property, and the digital authentication of ownership.”

On the other hand, the Chinese authorities have been unequivocal about their criticism of speculative NFTs. In April, China’s leading financial industry associations suggested that NFTs should not be used for securitization; Nor should they trade in cryptocurrencies, which are banned in the country.

These proposals effectively rule out the existence of global NFT marketplaces such as OpenSea in China. What the country allows, however, are private, consortium blockchains administered by trusted institutions. Tech giants like Tencent, Alibaba and Baidu have all built their own “digital collectibles” marketplaces – a term used by some in China to underline the negative economic connotation of NFTs – where consumers can only make purchases by using the country’s fiat currency and banned from secondary trading.

Blockchain, the distributed ledger technology that underpins NFTs and cryptocurrencies, also gets a lot of mention in Shanghai’s digital financial plan. It is expected. Over the years, China has embraced the blockchain with open arms, with President Xi Jinping giving his personal support to the technology.

First, the document calls blockchain a “key technology”, and places it side by side with artificial intelligence, cloud computing and big data – industries that have received strong support from the government.

Blockchain should be “deeply fused” with AI, big data and other new technologies to “strengthen” fintech applications, for example by using distributed ledgers and smart contracts to enable end-to-end payment transactions. Blockchain can also be used to authenticate identities and facilitate reliable transactions, the document states.