China launched a state-sanctioned secondary trading platform for digital assets on New Year’s day. After concern about the speculation around non-fungible tokens (NFT), the four tech giants Tencent, Ant, Baidu and JD self-imposed a ban on the secondary trading of digital collectibles in mid-2022. The new national trading venue only has a live signup process, so it remains to be seen what kind of intellectual property is supported, with the platform’s innovation working group made up of museums, tourist organizations, and copyright holders.
The state-owned China Digital Assets Trading Platform was jointly created by the China Technology Exchange, the Cultural Relics Exchange, and the Copyright Service Centre aiming to standardize the trading process to dampen speculation.
One of the drivers is that China recognizes that digital assets will be important for the development of the metaverse, whether for avatars, clothing, art or museum pieces. In addition to the innovation working group, there is a metaverse working group that includes local governments and state-owned enterprises.
Previously, the Chinese government has repeatedly highlighted the financial risks of NFTs and the speculative nature of the NFT market. Although NFTs are not subject to the same Chinese restrictions as cryptocurrencies, considering the voluntary suspension of secondary trading, NFT services introduced by the likes of Tencent have already been closed down. However, NFTs are supported on the government-backed infrastructure network BSN, including for more business-oriented use cases.
With the consumer NFT hype, it’s easy to forget the more B2B use cases. Asset registration and verification services are common blockchain applications. And that extends to intellectual property, with both Baidu and Ant previously launching copyright blockchain applications. In November 2022, the Patent offices of Poland and Italy joined the EUIPO blockchain, which logs registrations and updates to trademarks and design filings. Similarly, Italy’s music copyright body SIAE, worked with Algorand to protect its intellectual property.
However, the digital asset trading platform in China plans to go a step further to act as a credible inventory service mechanism for tradeable digital assets. While the entire range of services provided by the new trading platform is not detailed, the platform would provide digital asset registration, verification and rights monitoring through the China Cultural Protection Chain. It remains to be seen what restrictions will be imposed on the resale of digital collectibles, considering the government’s previous stance on the financial risks associated with speculative trading.