All You Need To Know To Advertise With NFTs In China – Fin Tech

Marketing with NFTs (non-fungible tokens) has become a new trend
in China.

Imagine how exciting when buying a piece of digital artwork on
the internet and getting a unique digital token that proves your
authority over the artwork you bought. In time, when the NFT
artwork sells well online, the offline product price arises as
well.

Wouldn’t it be a unique way to promote a upcoming new
product to the consumers?

However, the market and regulatory environment for NFTs in China
have evolved quite differently than in many other countries.

Legal Environment: Ambiguous

On May 18 2021, the National Internet Finance Association of
China, China Banking Association and Payment & Clearing
Association of China issued the Announcement on Prevention of
Speculation Risks Caused by Virtual Currency Transactions.

In this announcement, it is clear that China completely banned
trading and related activities of cryptocurrencies. NFTs are
generally created using the same type of programming used for
cryptocurrencies. Namely, it relies on the same blockchain
technology and are often associated with cryptocurrencies.
Therefore, many experts predicted that the NFTs will be banned at
that time.

On September 15, 2021, the Circular on Further Preventing
and Handling the Risk of Speculation in Virtual Currency
Transactions, issued by the People’s Bank of China (PBOC)
together with 9 other governmental departments, came into
effect.

This notice bans the use or circulation of virtual currencies in
the market as currency, along with all virtual currency
transactions. It also says that it is illegal for overseas
cryptocurrency exchanges to provide such services to Chinese
residents.

On 13 April, 2022, several industrial associations including the
National Internet Finance Association, Securities Association, and
the China Banking Association jointly issued a Proposals on
Preventing NFT-related Financial Risks.

It makes clearer that NFTs shall not be traded or used as any
kind of financial instrument. Therefore NFT in China can only be
considered as “digital collectibles” instead of
“tokens”, their current status is defined as non-currency
so it cannot fall into the scope of trading and related activities
of cryptocurrencies.

On July 20, 2022, Tencent decided to close its NFT platform
“Huanhe”, the biggest NFT platform in China, as a result
of the government discouraging any trading or speculation in
NFTs.

However, there are still several mainstream platforms offering
to mint and purchase NFT works. They are trying to comply with the
Chinese government policy. For example, Alipay updated its NFT
platform agreement, saying that NFT cannot be traded between users,
and the owners have to hold NFT works for at least 180 days after
he or she purchased the NFTs, or 2 years after receiving the NFTs
as a gift before giving to the next person. In addition, the owner
needs to pass the identity verification and a series of supervision
procedures.

What should be emphasized here is that the buyer cannot
use the NFTs in any commercial methods without the approval of the
copyright owner. Some individuals think that the NFTs
issued by Alipay are not NFTs in the crypto asset community.
Nevertheless, many citizens are still trading their NFTs in the
underground secondary market.

Conclusions

In summary, brands may still be able to use NFTs successfully in
their promotions in China but they should use it in a careful way.
Currently, global approaches to NFTs are not totally banned, but
you need to consider:

• Register your NFTs legally (choose platforms which obtain the
  relevant license for the record)




• Describe NFTs in China as “digital collectibles”, not
  as “tokens” and never as “currency”




• Do not allow or encourage any trading or speculation in NFTs,
  or imply that NFTs may increase in value or can be used as
  currency. Namely, you can consider buying NFT works as a donation
  to the owner, in a way, to support their career.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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