China NFT Weekly: Dating in the Metaverse

Digestible news about the latest developments across the fields Web3, NFT, blockchain and metaverse in China and beyond, collected for you every week by Pandaily.

This week: metaverse dating app Soul eyes Hong Kong IPO, ByteDance continues metaverse investments with acquisition of VR startup PoliQ, Chinese technology giants promise to end NFT speculation and more.

Metaverse Dating App Soul Eyes Hong Kong IPO

TencentSoul-backed social media and dating app Soul are competing for a listing in Hong Kong, after abruptly withdrawing the plan to raise $ 185 million for a listing on Nasdaq last year. The Financial Times first reported this story.

• Soulgate Inc., the operator of the social networking app Soul, submitted an application for public listing on the Hong Kong Stock Exchange (HKEx) on Thursday, with Bank of America Merrill Lynch and CICC as co-sponsors.
• Soul’s owner, Soulgate, submitted papers in Hong Kong on Thursday, revealing that the company had lost 1.3 billion yuan ($ 194 million). The company recorded revenue of 1.28 billion yuan ($ 190 million) in 2021, an increase of 157% from year to year. In addition, the gross profit margin reached 85%.
• Soulgate is supported by technology giant Tencentwhich acquired a 49.9% stake in the company as of 2020.
• Founded in 2016 and built by a Shanghai team, the app markets itself as an “algorithm-driven online social playground” that matches like-minded users called through an elaborate personality and preference test.
• Soul makes money primarily from selling virtual items and membership subscriptions. A research report from last year shows that Soul users on average spent around 40 minutes every day on the app. It also joined TikTok and QQ to cut the top 100 entertainment apps worldwide in terms of both downloads and revenue. (Financial Times)

READ MORE: Tencent-supported social networking app Soul pulls US IPO Plan

ByteDance continues Metaverse investments with acquisition of VR startup PoliQ

TikTok’s parent company, ByteDance, has acquired Chinese virtual reality (VR) startup PoliQ as part of its plan to expand its portfolio of metaverse hardware, content, software and platforms. The SCMP first reported this story.

• Beijing headquarters ByteDance acquired PoliQ, operator of the once popular virtual social platform Vyou, for “tens of millions of yuan” last week, according to the Chinese Business Directory Tianyancha.
• PoliQ will now be part of Pico, a VR headset manufacturer that was acquired by ByteDance in August last year. PoliQ founder Ma Jiesi will now work as head of Pico’s social center department, according to SCMP, which cites Ma’s profile on Maimai, a social networking site for Chinese professionals.
• Pico was the third largest manufacturer of virtual reality headsets globally in the first quarter of 2021, with shipments growing by 44.7% year-on-year, according to IDC.
• ByteDance’s acquisition of Pico for nearly $ 5 billion ($ 772 million) was the first major investment by a Chinese technology giant in the metaverse hardware sector.
• The PoliQ acquisition comes as ByteDance has expanded its portfolio in the metaverse industry. Technical giants around the world are also doubling the sector, with Meta pushing into VR fitness with a $ 56.6 million acquisition of Within, the maker of the VR training app Supernatural. (SCMP)

READ MORE: ByteDance acquired Metaverse Social Startup PoliQ

Debt-ridden cryptocurrency lender Babel Finance wants to hire restructuring specialist Houlihan Lokey

Babel Finance hires US investment banking firm Houlihan Lokey, a specialist in restructuring and distressed mergers and acquisitions, a few weeks after suspending withdrawals due to liquidity problems. CoinDesk and BlockWorks first reported this story.

• The Hong Kong-based crypto-lender froze withdrawals last month amid a cascade of defaults and liquidations related to over-leveraged firms, including Three Arrows Capital and Celsius. Babel later said that they had reached an agreement with counterparties to repay some debts to facilitate short-term liquidity.
• Babel Finance abruptly suspended withdrawals on June 17, citing “unusual liquidity pressure” – similar to competitors Celsius, Finblox and CoinFLEX. The company said in a statement last week that it was seeking to fulfill its legal responsibilities to customers by continuing “to avoid further transfer and diversification of liquidity risk.”
• In May, the company raised $ 80 million worth $ 2 billion. Major investors in the round included Jeneration Capital and 10T Holdings, as well as existing shareholders Dragonfly Capital and BAI Capital, according to BlockWorks.
• The news also came amid a series of layoffs and voluntary dismissals from Babel. Among those leaving in the near future are Yulong Liu, who served as head of partnership in Babel for almost three years, and communications director Jacynth Wang. (CoinDesk, Blockworks)

Chinese technology giants promise to end NFT speculation

Chinese technology giants including Tencent Holdings and Ant Group have signed an agreement to stop the secondary trading of NFTs and “self-regulate” their activities in the market. Reuters and TechCrunch first reported this story.

• 30 companies and institutes have agreed to the “Digital Collectible Industry Self-Discipline Development Initiative” where they will help prevent secondary trading and speculation in NFTs, or digital collectibles as they are officially known in China, according to Reuters, citing a report by Shanghai Securities News.
• The China Cultural Industry Association also joined the companies in issuing the proposal. Although industry organizations do not have regulatory power over companies, they can be useful in developing industry regulations. China Cultural Industry Association was founded with the permission of the Prime Minister and counts Alibaba and Tencent among the members.
• Other signatories included Baidua Chinese company in technology, Internet search and Internet services, and JD.comone of the country’s largest e-commerce sites.
• The pact, which contains a total of 14 articles, calls on platforms to ensure that their blockchain technologies are “secure and controllable.” It could also push the Chinese NFT industry one step closer to standardization. (Reuters, TechCrunch)

EU agrees on new regulation to tame crypto “wild west”

The European Commission, EU legislators and member states have secured an agreement on what will probably be the first major regulation for the cryptocurrency industry. Reuters, CNBC and Cointelegraph first reported this story.

• The Landmark Act, known as Markets in Crypto-Assets, or MiCA, is designed to impose tighter restrictions on a number of players in the crypto market, including exchanges and issuers of stablecoins, tokens that are intended to be linked to existing assets such as the US dollar.
• Under the new law, stack coins will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals.
• MiCA will also develop standards for crypto companies to reveal information about their environmental and climate footprint.
• Globally, cryptocurrencies are largely unregulated. National operators in the EU are only required to monitor and control transactions related to money laundering.
• “Today, we are ordering the Wild West of cryptocurrencies and setting clear rules for a harmonized market that will provide legal certainty for issuers of cryptocurrencies, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger, legislator who led the negotiations on behalf of the European Parliament. (Reuters, CNBC, Cointelegraph)

Facebook is starting to test new NFT features

Meta has begun rolling out an NFT feature on Facebook, just a week after its CEO, Mark Zuckerberg, announced the plan. TechCrunch and The Block first reported this story.

• The feature will initially be open to a select group of US-based creators, similar to how the company rolled out NFTs on Instagram a month ago.
• While Zuckerberg said the test will allow creators to cross-post on Instagram and Facebook, the sharing feature across both platforms has not yet rolled out.
• In his Facebook post announcing the move, Zuckerberg also mentioned that the company plans to enter augmented reality (AR) NFTs and 3D NFTs using the company’s Spark AR software platform.
• Meta has said that there will be no fees associated with posting or sharing a digital collectible, and adds that it will not offer the ability to turn digital collectibles into ads, for the time being.
• It is unclear when the new NFT feature will be made available to all Facebook users. (TechCrunch, The Block)

That was all for this week’s newsletter – thank you for reading! As always, we welcome feedback on how we can make this newsletter better. Write to us at [email protected]. See you again next week!