China's Hainan to boost NFT oversight as digital yuan trial ramps

Published at: Jan. 31, 2023

Authorities from the Hainan province in southern China have vowed to increase oversight on the nonfungible token (NFT) sector to “promote the healthy development” of the sector and to stomp out fraud and other associated risks.

In a separate announcement, the People’s Bank of China (PBoC) also announced that it is working on new features for its Central Bank Digital Currency (CBDC) pilot program, referred to as the digital yuan or eCNY.

NFT oversight

In a public notice posted on Jan. 29, Hainan’s market regulator and nine other agencies from the province outlined a lengthy plan to tackle the NFT sector moving forward.

A translation of the document reveals that the regulator is placing emphasis on promoting NFTs as part of the digital economy, particularly as a way to attract foreign investment in the Hainan Free Trade Port. 

The province agencies however said they want to oversee the NFT market in a way that restricts “market chaos” such as misleading information, speculation, copyright theft, fraud, money laundering and fictitious value.

Some measures outlined include “severely” cracking down on false propaganda under current frameworks such as the “anti-unfair competition law,” preventing copyright infringement by guiding and urging internet platforms to remove such content, and cracking down on fraud.

An emphasis has also been placed on educating the public by conveying the “risks and laws” of the sector so that they “purchase cautiously” and avoid losses due to wild speculation on NFTs.

The Chinese government has had a unique outlook on the NFT sector since it boomed in popularity, while the asset class has not copped major blanket bans unlike private cryptocurrencies, state agencies have often been quick to deter any sort of speculative behavior.

Digital yuan adds bells and whistles

According to an announcement shared via Baidu on Jan. 30, the People’s Bank of China (PBoC) plans to add new features to its long-running pilot trails of the digital yuan.

The bank suggested that it is developing a QR code-based transaction system so that “ consumers can ‘scan with one code’” to make the CBDC more user-friendly.

It also emphasized that such tech integrations will help China “realize the interconnection between the digital renminbi system and traditional electronic payment tools.”

Another touted benefit of the QR code system is that merchants will be able “support various transactions” while limiting the increase of costs to consumers.

The PBoC emphasized that in 2022 it had piloted the CBDC across 17 provinces, and rolled out around 30 digital yuan red “envelope activities” in which it airdropped small amounts of the asset to citizens.

The campaign was used to promote the use of the asset, particularly concerning payments for “low-carbon travel” such as public transport.

Related: UK Bitcoin community reacts to incoming CBDC and digital pound rollout

Earlier this month, the eCNY network received a key upgrade via the integration of smart contracts.

According to a report from local crypto media outlet 8btc, smart contract features were launched via the food and retail focused delivery app from Meituan.

When users place and order and pay with their e-CNY wallet, a smart contract triggers and searches for keywords and purchased items in their order. If a user buys something on the list of keywords for the day, they go in the draw to win part of a prize worth around $1,300.

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Regulation
China
Cbdc
Peoples Bank Of China
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