Is NFT legal in China? Can NFT be traded in China?

With the continuous development of blockchain technology, non-fungible tokens (NFTs) have rapidly risen around the world and become a hot topic in the digital asset market. In China, the legal status, trading feasibility and future development prospects of NFTs have become the focus of attention of the industry and investors.

1. Is NFT legal in China?

1. Overview of the legal environment

In China, the legal status of NFTs is relatively complex, and there are currently no clear laws and regulations specifically for NFTs. However, the compliance of NFTs can be analyzed through the existing legal framework.

2. Legal status of digital assets

According to current Chinese laws, the legal status of digital assets is still unclear. Although blockchain technology has been recognized and promoted in many fields, the supervision of cryptocurrencies and related digital assets remains strict. In 2017, the People's Bank of China and seven other ministries and commissions issued an announcement banning token issuance financing (ICO) and rectifying cryptocurrency exchanges.

3. The particularity of NFTs

Under traditional cryptocurrencies, NFTs are characterized by their irreplaceability and uniqueness. NFTs are usually used to represent digital assets such as digital artworks, music, videos, as well as in-game items and virtual real estate. Therefore, from a legal perspective, NFT is closer to a digital collection or virtual commodity.

4. Policy dynamics

In recent years, the Chinese government has shown support for blockchain technology and encouraged its application in finance, logistics, government affairs and other fields. However, its attitude towards cryptocurrencies and their derivatives remains cautious. In 2021, the Chinese government strengthened its supervision of cryptocurrency mining and trading, but did not explicitly ban NFTs. Therefore, the legality of NFTs in China mainly depends on whether its application and trading methods comply with existing legal provisions.

2. Can NFTs be traded in China?

1. Current status of NFT trading

At present, China's NFT market is still in its early stages. Although there is no clear law prohibiting NFT transactions, there are no special laws and regulations to regulate it. NFT transactions are mainly carried out through some decentralized trading platforms and social media channels.

2. Trading platform

In China, some local platforms have begun to try NFT business. For example, Ant Chain, a subsidiary of Alibaba, has launched NFT products and sells them on its e-commerce platform. Tencent has also launched NFT products through its blockchain service platform. Although these platforms are trying NFT business, their operating models are relatively cautious, strictly abide by relevant laws and regulations, and avoid touching the regulatory red line.

3. Trading methods

China's NFT transactions are mainly carried out in the form of digital collections, and transactions are realized through purchase, transfer, etc. Due to the uncertainty of the legal environment, many platforms have set restrictions on NFT transactions, such as prohibiting secondary transactions or resales. This practice is both to avoid legal risks and to prevent market speculation.

4. Regulatory challenges

The Chinese government's emphasis on financial stability and market order has led to strict supervision of cryptocurrencies and their derivatives. Although NFT transactions are allowed to a certain extent, market participants still need to abide by relevant laws and regulations to avoid illegal fundraising, financial fraud and other behaviors. At the same time, the government may further improve NFT regulatory policies based on market development.