The People’s Republic of China’s Supreme People’s Procuratorate, the national body in charge of criminal prosecution, expressed its opinions on the non-fungible token (NFT) market in a piece that was posted online on May 15. The article, which was put together by three authors, outlined the prosecutors’ assessment of the market dangers and the subsequent justifications for more vigorous enforcement.
The tendency of “securitization” of NFTs, which refers to the shared ownership of one copy by several users, was called attention to by the writers as failing to meet the requirements of non-reproducibility, indivisibility, and originality. They think that this tendency has to be addressed right now because they think it poses a serious risk to the stability of the NFT market.
Such employment of different marketing strategies, including airdrops, blind boxes, and limited sales, has led to a “inflation of prices” on NFTs, which the prosecution also expressed their worry about. According to the writers, there is no support for the skyrocketing prices of some non-fungibles in terms of “artistic beauty” or “reasonable pricing mechanism.” Marketing strategies like incentives and dynamic rights and interests, in the opinion of the procuratorate, can very readily develop into prohibited pyramid schemes.
Reflecting on the words of one of the authors, “From the perspective of property rights, consumers do not enjoy the ownership of the NFT digital assets they purchase in the sense of civil law, and consumers cannot prohibit others from accessing, copying or disseminating the digital assets mapped by NFT.” The author adds their opinion of the consumer needs stating, “What consumers enjoy is only an exclusive right to prohibit others from tampering with the ownership of the NFT recorded on the blockchain.”
A “crackdown on criminal activities,” equal focus on governance and punishment, investment in risk research, and law popularisation are all part of the suggested response to these dangers. According to the report, it will be up to the national prosecutors to distinguish between “true innovation” and “pseudo” innovation and defend the former.
In spite of Hong Kong’s continued advancement in the use of cryptocurrencies, China has not altered its anti-crypto attitude. Furthermore, the nation appears to view Artificial Intelligence (AI) with the same hostility. A suspect who reportedly used ChatGPT to create false news reports was apprehended by local police and arrested in the Chinese province of Gansu at the beginning of May.
The NFT industry has promise, but there are hazards associated with it, according to Chinese prosecutors, including financial, security, and “legal” issues. Therefore, the market is in need of both thorough control and a crackdown on “pseudo-innovation.” The inventiveness and originality of the market should not be hampered by this crackdown, it is crucial to remember.