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After a crypto crackdown, is China going after NFTs and their promoters

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The Cambridge Bitcoin Electricity Consumption Index showed that China held 0% of the average monthly hashrate share in August. After this, many concluded the country had done away with crypto for good.

But now, the Chinese authorities seem to have their eyes on a new target: NFTs.

Noting NFTs

Journalist Colin Wu announced that Chinese regulators had “interviewed” some Internet companies regarding their involvement with NFTs. While NFTs can reportedly only be used as “digital collectibles,” that hasn’t stopped large players like Tencent and Alibaba from launching NFT platforms.

At press time, both companies had responded to Wu, distancing themselves from “unregulated” NFTs and illegal virtual currencies.

According to a translation, Tencent stated,

“The business logic of Magic Core Digital Collection is completely different from the internal logic and extension of the overseas unregulated NFT business.”

Wu himself commented,

“Obviously they are under some pressure from supervision.”

Great Wall of Bans

Just days ago, DHL China invited people to mint customized NFTs of its mascot using the VeChainThor blockchain. Since then, the tweet has been deleted. VeChain was recently certified by the China Association for Standardization.

Worth noting, however, that there was some confusion about the legal status of various crypto assets. This became especially clear when an article by China’s Loudi Taxation Bureau [State Administration of Taxation] recently called for crypto assets to be taxed.

Dated 19 October, the statement mentioned,

“According to the principle of ‘law is not retroactive,’ the services previously provided by overseas exchanges to residents of China can be regarded as ‘not expressly prohibited by law,’ but they must pay value-added income (tax) on their income from China in accordance with China’s tax law.”

It added,

“At the same time, within the current legal framework, China does not prohibit individuals from holding virtual currencies such as Bitcoin, and the transaction of virtual currencies is defined as an ‘invalid civil act,’ but it is not explicitly prohibited by law.”

This flies in the face of the government’s declaration that all crypto transactions are illegal.

Think about the environment

China is pushing for more eco-friendly energy resources, and wants to cut fossil fuel usage to below 20% by 2060. Furthermore, the authorities resolved to curb initiatives that consume large volumes of energy.

Meanwhile, Ethereum-based NFTs have been criticized for their significant carbon footprint. Could the two factors be linked? In late September, analyst Raoul Pal suggested that China’s crypto crackdown could be meant to help the administration control electricity prices and push for “green energy.”

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Sahana is a full-time journalist at AMBCrypto. She has a Masters in Journalism and her areas of study include crypto-regulation, digital society, privacy, and intersectionality. Ask her about film photography and philately.