Digestible news on the latest developments across the fields of NFTs, blockchain and metaverse in China, compiled for you every week by Pandaily.
This week: Chinese tech giants tighten platform rules on digital collectibles as regulation remains uncertain, China strengthens control of capital outflow following US Fed’s interest rate hike, China’s central bank on hiring spree to expand e-CNY trial, and more.
Chinese Tech Giants Tighten Platform Rules on Digital Collectibles as Regulation Remains Uncertain
- Alibaba affiliate Ant Group’s NFT platform Jingtan will “alert the police and hand over [details] to judicial authorities” if users are found to be organizing transactions outside the platform in ways that constitute criminal activities, SCMP said, quoting Jingtan’s latest terms of service.
- Alibaba requires users to register with their real names, and will report and punish buyers who engage in money laundering and other fraudulent activities.
- Chinese multi-purpose social app WeChat recently banned several NFT-related mini programs from its platform, including West Lake No. 1, owned by Hangzhou-based silk product manufacturer Wensli, and TheOne.art, a digital collectible seller.
- Beijing has so far tolerated activities around NFTs, but state media has repeatedly warned the public against bubbles and speculative risks around the assets.
- Unlike traditional NFTs, digital collectibles in China are priced and sold with the country’s official yuan instead of cryptocurrencies, and platforms do not allow the tokens to be resold or traded. (SCMP)
Volvo’s Parent Company Establishes Blockchain Joint Venture Headquarters in Wuxi, China
Geely Holding, a Chinese multinational automotive car manufacturer and owner of Volvo, and Concordium, a private blockchain, announced the creation of a blockchain joint venture in China’s eastern city of Wuxi, according to a report by Cointelegraph.
- The project aims to develop blockchain technologies and improve blockchain standards, mainly in the automotive industry.
- Since establishing the joint venture last February, Geely Holding has created a Digital Technology Sector, or DTS, a subsidiary to invest in cutting-edge technologies such as blockchain.
- The two entities plan to offer businesses and customers access to new blockchain platform-based business models and decentralized applications.
- DTS has already developed blockchain services, such as a digital asset management platform and a blockchain traceability platform, and has been deployed in Geely’s automotive products.
- Concordium is a blockchain integrating both privacy with accountability through its ID layer. Its protocol-level ID ensures that every wallet is associated with a real-world identity verified through a third-party ID provider; meanwhile, it leverages zero-knowledge proofs to ensure the anonymity of transactions, according to Cointelegraph, quoting a press release. (Cointelegraph)
China Strengthens Control of Capital Outflow Following US Fed’s Interest Rate Hike
Beijing is closely monitoring foreign exchange activities for fear of potential capital outflows triggered by the US Federal Reserve’s approval of interest rate hikes, but control of the forex market could be made easier by the introduction of the e-CNY, according to a report by Forkast.
- China’s State Administration of Foreign Exchange (SAFE) said in a statement on Wednesday that it will ensure the stable operation of the forex market. “We’ll strengthen the monitoring and macroprudential management of the forex market, and guide market entities to use exchange-rate hedging tools more widely to actively prevent and defuse the risks of external shocks.”
- Concerns have emerged over capital outflows after the Fed approved its first interest rate hike in more than three years, raising the federal funds rate (the target interest rate set by the Fed at which commercial banks borrow and lend their extra reserves to one another overnight) by a quarter of a percentage point, to a target range of 0.25% to 0.5%. Several more rate increases may also be in the pipeline, according to Forkast, quoting the Fed committee.
- China’s current capital outflow pressure mainly comes from a global risk-averse sentiment and the worsening liquidity environment amid the Russia-Ukraine war, and the narrowing interest rate gap of China and the US – a key factor that drives international capital flows, according to analysts from China Merchants Securities.
- However, most Chinese retail investors prefer home markets to foreign markets, due to unfamiliarity with foreign companies, and the government’s hisotorically tight control on capital outflow.
- Richard Turrin, a Shanghai-based fintech consultant, said that while the e-CNY is still only in use for domestic trials at present, in the future, any outflow that attempts to take advantage of rate hikes could easily be curtailed because the digital yuan is a “controllable currency.”
- The introduction of the e-CNY could loosen up China’s tight capital control, as the government can easily monitor cross-border transactions and thus allow more funds to flow without having to worry about money-laundering, according to Forkast, quoting Stanley Chao, managing director of Asian business strategy firm All In Consulting. (Forkast)
SEE ALSO: China to Scope of Expand E-CNY Piolot
China’s Central Bank on Hiring Spree to Expand e-CNY Trial
The People’s Bank of China (PBoC) said it would expand the scope of its e-CNY trial this year, and fill hundreds of engineer and product developer positions to accelerate the initiative, according to a report by SCMP.
- The digital yuan push came after two years of trials in several Chinese cities, including Beijing, Shenzhen and Suzhou, as well as during the Beijing Winter Olympics.
- Despite lagging behind WeChat and Alipay (two of China’s largest cashless payment services) in terms of usage frequency and total turnover, the e-CNY is quickly emerging “as an alternative choice for Chinese consumers.
- The e-CNY reached 261 million users by the end of last year, nearly twice the number recorded back in October, according to SCMP, citing the PBoC.
- To support the expansion of the e-CNY project, the Digital Currency Research Institute – the central bank unit responsible for developing and promoting the digital yuan – has kicked off a hiring spree. The recruitment drive marks the institute’s largest-ever external hiring exercise since it was established in 2016.
- China is far ahead of the world in its exploration of introducing a sovereign digital currency, and the hiring spree suggests that the central bank is eager to step up its efforts to promote the e-CNY as a way to replace banknotes and coins. (SCMP)
Madonna Jumps on NFT Bandwagon with $570,000 Bored Ape Investment
The “Queen of Pop” announced on Instagram and Twitter late Thursday that she had acquired a Bored Ape Yacht Club NFT worth more than half a million dollars. Madonna is the latest celebrity to enter the metaverse and publicly endorse digital apes, according to a report by Bloomberg Wealth.
- “I finally entered the metaverse,” Madonna wrote on her post. “My very own Ape! What should I name her?”
- Transactions on OpenSea, an NFT marketplace, show that Madonna used crypto-payment company Moonpay to complete the purchase. Moonpay bought Ape #4988 earlier this month for 180 Ether (now worth about $570,000). The NFT was transferred to another wallet two days ago, before Madonna posted it on her Instagram account.
- Over the past year, Bored Ape has become one of the top NFT collections with $1.4 billion in lifetime sales, according to data tracker DappRadar. The new endorsement by Madonna comes at a busy time for Yuga Labs, the collection’s parent. Last week the company said it raised $450 million in a funding round led by venture capital firm Andreessen Horowitz. (Bloomberg)
David Beckham Becomes Global Brand Ambassador for DigitalBits Blockchain
Fomer English Premier League footballer David Beckham has become a global brand ambassador for the DigitalBits blockchain, launching his own range of NFTs in the process, according to Cointelegraph.
- Beckham will release a series of NFTs and “other Blockchain-based digital assets,” according to the brand ambassador announcement, with minting taking place on the DigitalBits blockchain.
- Beckham said the NFT collections are an “opportunity to create new experiences for my fans online.” According to DigitalBits, Beckham has a following of over 138 million, with an annual impression rate that surpasses nine billion across Instagram, Facebook and China-based social media platforms Weibo and Douyin.
- Crypto companies, and in particular crypto exchanges, are ramping up partnerships with sporting teams and icons in a marketing effort to target mainstream consumers. (Cointelegraph)
That’s it for this week’s newsletter – thanks for reading! As always, I welcome any feedback on how to make this newsletter better. My email is [email protected]. Hope you all are doing great, and see you again next week!