There has been an increase in reports of grievances related to non-fungible tokens (NFTs) in China over the last year. In 2022, there were about 59,700 complaints concerning NFTs, compared to the mere 198 recorded in 2021. At present, NFTs exist in a legally ambiguous space in China.
Annual Chinese NFT Complaints Surge by 30,000%
In the past year, China’s State Administration for Market Regulation (SAMR) has observed a significant increase in complaints about NFTs, with a 30,000% growth in filings from 298 in 2021 to 59,700 in 2022. This demonstrates an increased level of awareness and concern among consumers in the country with regard to digital collectibles.
The report found that consumer complaints primarily centered on the non-delivery of purchased items, non-refunds, unjustified price hikes, excessive fees, and arbitrary banning of consumer accounts. Furthermore, it highlighted that supervising newly emerging sectors such as the digital collections (NFT) would be more challenging.
Recent NFT-Oriented Events in China
Despite the increasing prevalence of non-fungible tokens (NFTs) and digital art in China, these virtual assets remain in a largely uncertain space. Despite the Chinese government’s general ban on cryptocurrencies, we can still see some leniency in regard to digital collectibles, as long as they are not based on any crypto assets like Bitcoin and Ethereum.
The Hangzhou court in China issued a ruling in December 2022 that recognized non-fungible tokens (NFTs) as online virtual property, thereby ensuring their protection. This decision was a result of a court case concerning an NFT purchase. Having said that, Beijing imposed a strict prohibition of second-hand digital collectible markets in 2022, leading to a damaging effect on the industry and the closure of several NFT marketplaces in China.
Tencent Holdings’ Huanhe, a popular NFT marketplace, will also be closing in June. It has already begun to issue refunds to its customers, according to a notice on Huanhe’s mobile app on March 9th. Additionally, some NFT platforms in China have decided to relocate their businesses to Hong Kong due to compliance-related concerns.