The rise of the metaverse and Web3 technologies has reignited global interest in digital assets, particularly non-fungible tokens (NFTs). While international markets embrace decentralized, crypto-driven NFT ecosystems, China is charting a distinct path—one focused on stability, compliance, and integration with real-world value. This article explores the evolving landscape of NFT secondary trading, comparing regulatory approaches, market dynamics, and legal frameworks across global and domestic contexts. By analyzing current trends, risks, and policy signals, we aim to provide a comprehensive understanding of how NFTs are being reshaped within the broader vision of a sustainable digital economy.
Global NFT Markets: Decentralization, Volatility, and Regulatory Response
Over the past few years, overseas NFT markets have matured rapidly, establishing key operational characteristics that define their ecosystem.
Core Features of International NFT Platforms
1. Anonymity via Wallet-Based Access
Most global NFT platforms operate on blockchain networks where users interact through cryptocurrency wallets—such as MetaMask or Phantom—without disclosing personal information. This design prioritizes user privacy but complicates identity verification and regulatory oversight.
2. Public and Transparent Transactions
Blockchain technology ensures that every NFT transaction is recorded immutably on a public ledger. Buyers and sellers can trace ownership history and verify authenticity without relying on centralized authorities, enhancing trust in peer-to-peer exchanges.
3. Cryptocurrency as Primary Settlement Method
Transactions are predominantly conducted using cryptocurrencies like Ethereum (ETH), Solana (SOL), or Binance Smart Chain (BSC) tokens. OpenSea, Rarible, and Foundation all rely on ETH for payments, reinforcing the deep integration between NFTs and digital currencies.
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Risks and Regulatory Shifts
Despite technological advantages, the tight coupling between NFTs and volatile crypto markets introduces systemic risk. The collapse of FTX in November 2022 triggered a sharp downturn across digital assets. According to NFT Price Floor data:
- Damien Hirst’s The Currency dropped 12.6% to $4,666.60
- Moonbirds fell 4.7% to $8,397.50
- Bored Ape Kennel Club declined by 8.3%
Even high-profile holders were affected—Justin Bieber’s Bored Ape NFT, purchased for $1.3 million, later traded below floor price at around $70,000.
This interdependence highlights a critical vulnerability: when crypto values plummet, NFT valuations follow. In response, regulators are stepping in:
- The U.S. SEC proposed new rules requiring firms managing digital assets to register as broker-dealers.
- Kraken settled with the SEC for $30 million over unregistered staking services.
- The Responsible Financial Innovation Act (RFIA) aims to classify digital assets and assign clear regulatory oversight.
These moves signal a shift from unregulated growth toward structured governance—a necessary evolution to restore investor confidence.
China’s Approach: Controlled Innovation in the Metaverse
In contrast to the decentralized West, China’s strategy emphasizes regulated development, aligning digital innovation with national economic goals.
Policy Support and Strategic Vision
Since mid-2022, Chinese authorities have actively promoted metaverse-related industries:
- Shanghai’s Digital Economy 14th Five-Year Plan supports pilot projects for NFT trading platforms.
- The city launched initiatives to develop a “Digital IP Market,” including potential listings on the Shanghai Data Exchange.
- Cultural institutions like “Cultural Cloud” released非遗-themed NFTs (e.g., Shanghai silk embroidery), while “Yuan Su Cang” issued Dunhuang-inspired collections.
Exhibitions such as the West Bund Art & Design Fair showcased NFT art installations, blending physical and digital experiences under curated, compliant frameworks.
Characteristics of Domestic NFT Platforms
Chinese digital collectible platforms operate under strict guidelines designed to prevent financialization and speculation.
1. Real-Name Registration and Fiat Payments
All major platforms require mobile number verification and real-name authentication. Transactions occur in RMB only—no cryptocurrency is allowed. Some platforms use internal points or virtual currency (similar to Tencent’s Q币), but these cannot be converted back to cash.
2. Restricted Secondary Trading
While some platforms allow resale, many limit functionality:
- Alibaba’s WhalePass (Jingtan): Allows gifting after 180 days; re-gifting requires two years of ownership.
- Others impose cooling-off periods or cap price increases to discourage speculative behavior.
3. Anti-Hype and De-Financialization Measures
Unlike Western counterparts that encourage flipping and liquidity mining, Chinese platforms emphasize cultural value over short-term gains. This reflects a broader policy stance: metaverse development should enhance real economies ("virtual strengthening reality"), not fuel speculative bubbles.
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Industry Guidelines and Gaps
Four key self-regulatory documents guide China’s NFT space:
- Digital Collectibles Compliance Evaluation Standard
- Initiative for Self-Disciplined Development of Digital Collectibles
- Compliance Guidelines for Issuing NFTs (Guangdong Internet Association)
- Initiative on Preventing Financial Risks Related to NFTs (China Internet Finance Association)
Common principles include:
- Mandatory real-name registration
- RMB-only settlement
- Prohibition of financialization and excessive speculation
However, significant gaps remain:
- No specific licensing requirements for NFT platforms beyond standard ICP/EDI permits.
- Limited consumer protection regarding transparency of metadata, provenance, and rights usage.
- Inadequate intellectual property frameworks governing creator rights and buyer permissions.
Legal Recognition and Future Outlook
Despite regulatory caution, judicial recognition of NFTs as legitimate digital property is growing.
Judicial Precedents Affirm NFT Value
In late 2022, the Hangzhou Internet Court ruled in a landmark case that:
- NFTs possess characteristics of property: scarcity, value, transferability, and control.
- They qualify as virtual property protected under Chinese law.
- Transactions fall under e-commerce regulations (E-Commerce Law), validating secondary market legality.
Another case involved off-platform ("off-chain") trading, where a buyer attempted to purchase an NFT directly from a seller. The court upheld the contract’s validity but invalidated the transfer due to technical constraints—NFT ownership must be recorded on-chain via authorized platforms. This decision reinforces compliance with platform rules and highlights the importance of infrastructure integrity.
Challenges Ahead
Three main obstacles persist:
- Regulatory Uncertainty: No formal legislation governs NFTs yet, leaving businesses unsure about compliance thresholds.
- Platform Instability: Several domestic platforms—including Tuling Art and Dream Once—collapsed abruptly in 2022.
- Limited User Creativity: Most platforms focus on institutional issuances (art, heritage) rather than enabling user-generated content—a missed opportunity for true community-driven ecosystems.
Yet optimism remains strong. With top-down support from national digital economy strategies and increasing judicial clarity, China is laying the groundwork for a stable, value-oriented digital asset market.
Frequently Asked Questions (FAQ)
Q: Is NFT trading legal in China?
A: Yes, within limits. While cryptocurrency-based trading is prohibited, RMB-denominated secondary markets for digital collectibles are permitted if they comply with anti-speculation and real-name rules.
Q: Can I make money from NFTs in China?
A: Profit-making through flipping is discouraged. Platforms often restrict resale or impose long holding periods. Returns are expected to come from long-term appreciation tied to cultural or artistic value.
Q: Are Chinese NFTs the same as global ones?
A: Not exactly. Chinese versions are typically called “digital collectibles” to distinguish them from crypto-linked NFTs. They run on private blockchains, use fiat currency, and prioritize compliance over decentralization.
Q: What happens if an NFT platform shuts down?
A: Users may lose access to their assets unless migration plans are in place. Regulatory pressure has already led to closures like Tencent’s Huanhe (PhantomCore), underscoring the need for platform stability.
Q: Do I own the copyright when I buy an NFT?
A: Usually not. Purchasers typically acquire usage rights for personal purposes only. Commercial use requires separate licensing from the rights holder.
Q: Will China ever allow open NFT markets with crypto?
A: Unlikely in the near term. Given strict capital controls and financial stability concerns, integration with decentralized crypto systems remains off-limits.
As both global and Chinese markets evolve, one truth becomes clear: sustainability trumps speculation. Whether powered by Ethereum or anchored in RMB, the future of NFTs lies in transparency, legal clarity, and meaningful utility—not just price tags.