China’s Opposition to NFT Fuels a Dynamic Black Market
Despite the Chinese government cracking down on cryptocurrency activity there, traders have discovered a means to get around regulatory restrictions by engaging in off-the-book deals for used NFTs.
All NFT transactions in China are conducted using the yuan due to the country’s restriction on cryptocurrency payments. NFTs are also not issued through decentralized blockchains, but rather through databases run by Chinese businesses due to the nation’s opposition to the technology.
Many digital collectible platforms around the nation have disabled the ability to resell NFTs in response to this stance. Despite this, some businesses have started allowing users to transfer ownership of NFTs, presumably without any money ever passing hands, in an effort to maintain the NFT boom in the nation. New platforms that connect vendors and buyers can now flourish thanks to this transfer capability.
The latest 10,000 asset digital collectibles collection from Ant Group, the finance division of Alibaba Group Holding, serves as a case study for this. The assets, which were marketed for 8 yuan ($2.66) each and each featured a Miao traditional headdress, were instantly in high demand. Many of the Miao headpiece NFTs immediately appeared on an unknown online flea market after their sales, with a 50% markup. Transfer platforms were now in doubt. Here, we can anticipate that transfers on transfer platforms and sales on flea markets will work together in a manner similar to the black market.
Although such enterprises are still available for the time being, they will either be eliminated or become economically unviable if or when authorities crack down on them.
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