The Chinese government has publicly made its stance on cryptocurrencies clear, and it is that such assets are banned within the country and cannot be used as a means of payment. However, despite this hardline stance, NFTs have seen a new lease of life among Chinese people.
The Chinese Twist
China’s approach to blockchain and digital assets has been different from what is applicable in the rest of the world. In China, blockchains are run by enterprises and NFTs are referred to as ‘digital collectibles’. This means that all forms of NFTs are contained within databases that are centrally controlled, just like Jingtan, a blockchain marketplace owned and controlled by Ant Group.
The other twist is that since cryptos are not permitted as a means of payment, users who wish to acquire digital art must make payments using the local yuan currency. The approach, so far, has been effective and is attributed to having aided local artists (through enterprises).
NFT Sale and the Black Market Rush
As already established, enterprises control the sale of digital collectibles in China. Based on established principles, collectors are not permitted to transfer their assets in exchange for money, and the transfer cannot be done until certain criteria are met. On Jingtan, collectors must hold their asset for 180 days before it can be transferred, while the receiver must be age 14 and above. The receiver must then hold on to the asset for a minimum period of two years before they can transfer to another individual.
This stringent rule around transfer is what has laid the foundation for the digital collectible black market.
Jingtan recently completed the sale of a graphical collection depicting Chinese traditional Miao headwear. The collection contains 10,000 pieces of art that were sold out in a single day at a price of 18yuan per art.
It was only a matter of hours until the artworks started to appear on the black market with markups up to 50%. This is not a coincidence and has been in the making for some time now. In fact, there is already an established correlation between recent art sales and black market cameos in China. According to statistics, there were roughly 300 of these black markets in China before May 2022, with the number skyrocketing to 820 in July. This is almost triple the initial number.
As such, the black market economy has created an alternative route for art collectors in China to transfer their choice NFTs in exchange for fiat.
It matters less the form a digital art takes - NFT or digital collectible, the underlying idea still remains the same. The recent boom in black market digital art trading in China is only a testament to the fact that humans will always find a way around restrictions especially when it comes to art, trends, and technological evolution.