China’s Hainan to increase NFT oversight as digital yuan trials rise

Authorities in southern China’s Hainan province have pledged to increase oversight of the nonfungible token (NFT) space to “promote the healthy development” of the sector and to stop fraud and other associated risks.

Separately, the People’s Bank of China (PBoC) has announced that it is working on new features for its central bank digital currency (CBDC) pilot program, known as digital yuan or e-CNY.

NFT supervision

In a public notice posted on January 29, Hainan’s market regulator and nine other agencies from the province outlined a long-term plan to tackle the NFT sector going forward.

A translation of the document reveals that the regulator is emphasizing promoting NFTs as part of the digital economy, particularly as a way to attract foreign investment in the Hainan Free Trade Port.

However, provincial authorities want to monitor the NFT market in a way that limits “market chaos” such as misleading information, speculation, copyright theft, fraud, money laundering and fictitious value.

Some outlined measures include “severely” cracking down on false propaganda under current frameworks such as “anti-unfair competition law”, preventing copyright infringement by guiding and encouraging internet platforms to remove such content, and cracking down on fraud.

There is also an emphasis on educating the public about the “risks and laws” of the sector so that they “buy carefully” and avoid losses due to wild speculation.

The Chinese government has taken a unique view of the NFT sector since its rise in popularity. Although the asset class has not met blanket bans like those imposed by China on private cryptocurrencies, government agencies have often been quick to discourage any form of speculative behavior.

Digital yuan adds bells and whistles

Meanwhile, according to an announcement shared via Baidu on January 30, the PBoC plans to add new features to its long-running experiments with the digital yuan.

The central bank said it is developing a QR code-based transaction system so that “consumers can ‘scan with one code'” to make the CBDC more user-friendly.

It stressed that such technological integrations will help China “realize the interconnection between the digital renminbi system and traditional electronic payment tools.”

Another touted benefit of the QR code system is that merchants will be able to “support diverse transactions” while limiting cost increases for consumers.

The PBoC emphasized that by 2022 it had piloted CBDC across 17 provinces and rolled out around 30 digital yuan red “envelope activities” involving airdropping small amounts of the asset to residents.

The campaign was used to promote the use of the digital yuan, particularly regarding payments for “low-carbon travel” such as public transport.

Related: UK Bitcoin community reacts to incoming CBDC and rollout of digital pounds

Earlier this month, the e-CNY network received a key upgrade via the integration of smart contracts.

According to a report by local crypto media 8btc, smart contract features were launched via the food and retail-focused delivery app from Meituan.

When users place and order and pay with the e-CNY wallet, a smart contract is triggered and searches for keywords and purchased items in their order. If a user buys something on the list of keywords for the day, they are entered into a drawing to win a share of a prize worth about $1,300.