China’s MP Calls for NFT Regulations in ‘Two Sessions’
Non-fungible tokens (NFTs) will be a key topic of discussion in China’s Two Sessions meeting, with a regulatory framework to be discussed by participants.
Feng Qiya, a member of parliament, revealed the plans to local news agency STCN, saying the discussions could have far-reaching consequences for digital collectibles in the country. Feng pointed out that the changes will cut across technological and regulatory aspects to unify China’s burgeoning NFT industry.
“While the digital collection industry is developing rapidly, current supervision is still based on industry self-discipline and local regulations, lacks a top-down supervision system coordinated by multiple departments, and the legal characterization of digital collections is still unclear,” Feng said.
Feng noted that the discussions at the Two Sessions would see participants offer solutions to improve interoperability between locally distributed ledgers. Highlighting the distinction between the local NFT market and the overseas-based market, she said Chinese digital collectibles leveraged RMB transactions instead of digital currencies.
Digital currencies have been banned in Mainland China since 2021, but despite their ban, NFTs continued to thrive in the wake of a brutal attack. In the first six months of 2022, over 15 million digital collections were issued in China, reaching a value of 653 million yuan ($94 million).
Since NFTs cross multiple sectors, Feng suggested that all interested regulators work together to issue comprehensive NFT legislation. She argued that the legislation would clearly specify the powers of each agency, with local financial oversight departments leading the crackdown on illegal speculation while “preventing the financialization and securitization of digital collections.”
Apart from regulatory activity, stakeholders in China’s NFT ecosystem will be encouraged to enter into industry alliances to promote self-discipline and self-regulation.
China’s two sessions are the country’s annual legislative meeting with thousands of delegates in attendance. It is currently in its 14th iteration and is closely watched by enthusiasts, given its reputation for predicting the direction of government policy.
Added property rights
A Chinese court in Hangzhou declared that digital collectibles could enjoy property rights under the country’s property laws. The decision eliminated any ambiguity surrounding the asset class following the blanket ban on digital currencies, and set a precedent for other courts to follow.
“NFT digital collections have the object characteristics of property rights such as value, scarcity, controllability and tradability. At the same time, they also have the unique characteristics of virtual network property such as network virtuality and technology, and belong to virtual network property,” the court stated.
See: Metaverse, NFTs and Blockchain
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