Compilation of Domestic Policies and Regulations on Digital Collectibles

Digital collectibles refer to unique digital tokens generated using blockchain technology for specific works of art. These tokens protect the digital copyright and enable authentic and trustworthy digital distribution, purchasing, collecting, and usage. The similarity between digital collectibles and virtual currencies like Bitcoin lies in the fact that both are encrypted assets generated using blockchain technology. However, the difference is that digital collectibles are non-fungible tokens, while virtual currencies are fungible tokens.

Since the NFT (Non-Fungible Token) craze started overseas in 2021, the concept of digital collectibles has rapidly gained popularity in China, leading to the emergence of numerous digital collectibles platforms. According to the “Digital Collectibles Application Reference,” as of July 2022, there are over 700 domestic digital collectibles platforms.

At the same time, China has not yet established a comprehensive top-down regulatory mechanism. The administrative regulatory policies regarding tokens mainly focus on regulations related to virtual currencies. Therefore, at this stage, based on some regulatory practices concerning virtual assets, the identification of virtual asset attributes is not fixed but rather based on the attributes demonstrated during their transactions and circulation.

Therefore, understanding the regulatory boundaries and operating in compliance, as well as correctly identifying the nature of digital collectibles to prevent fraud, are crucial issues that practitioners and consumers in the digital collectibles industry must seriously consider. In this article, we have compiled and organized relevant policies and guidelines in the domestic digital collectibles field over the past three years for your reference.

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The People’s Bank of China and other seven ministries

In December 2021, the People’s Bank of China and seven other ministries jointly issued the “Management Measures for Financial Product Online Marketing (Draft for Solicitation of Comments),” which clearly stated that the financial product catalog does not include digital collectibles.

Industrial Culture Development Center of the Ministry of Industry and Information Technology

On March 25, 2022, the Industrial Culture Development Center of the Ministry of Industry and Information Technology issued a notice regarding the collection of materials for the first batch of industrial culture digital collectibles, indicating that the center will establish an industrial metaverse service platform and plans to launch the first batch of industrial culture digital collectibles this year.

National Cultural Heritage Administration

On April 13, 2022, the National Cultural Heritage Administration prohibited the issuance of original cultural relic data as digital collectibles or the sale of original cultural relic data as limited commodities.

Internet Finance Association, etc.

On April 13, 2022, the Internet Finance Association and other organizations released the “Initiative to Prevent Financial Risks Related to NFT,” which stipulates that underlying commodities of NFTs should not include securities, insurance, credit, precious metals, or other financial assets. It also prohibits the weakening of the non-fungible characteristics of NFTs through dividing ownership or batch creation, or conducting token issuance financing (ICO) in disguise.

China Mobile Communications Federation Metaverse Industry Committee

On April 26, 2022, the China Mobile Communications Federation Metaverse Industry Committee, in conjunction with the Blockchain Professional Committee of the China Communication Industry Association, jointly issued the “Self-disciplinary Requirements for Regulating the Healthy Development of the Digital Collectibles Industry.”

Blockchain Copyright Application Center, National Key Laboratory of Science and Technology and Standards of the State Administration of Press and Publication

On July 6, 2022, the Blockchain Copyright Application Center, edited by the National News Publishing Administration’s Technology and Standards Integrated Key Laboratory, released the “Digital Collection Application Reference,” which introduced the related qualifications and guidance for the digital collection field, including: 1. The forms of digital collections include: one-time single sale of the same work; limited multiple sales of the same work. 2. The scope of digital collections includes: written works, oral works, music, drama, traditional art forms, dance, acrobatics, fine arts, architecture, photography, audiovisual works, engineering design drawings, product design drawings, maps, and model works.

On July 14, 2022, during the 2022 Trusted Blockchain Ecological Conference and the First Trust Technology Conference, the Cloud Computing and Big Data Institute of China Institute of Information and Communications released the “Trustworthy Digital Collection Initiative Self-Discipline Guidelines” and the “Trustworthy Digital Collection Platform List.” Currently, 36 units have formally signed the “guidelines” and will strictly abide by the requirements, maintaining the industry’s bottom line.

On August 24, 2022, the Shanghai Data Exchange established the country’s first digital asset section. On the day the digital asset section went online, the Shanghai Municipal Digital Exchange released the “Shanghai Data Exchange Digital Asset Section Management Specifications (Trial)” focusing on rules for digital asset registration, digital asset announcements, and the rights and obligations of participants. This specification enables the compliant and orderly operation of the digital asset section.

On September 4, 2022, at the China International Service Trade Fair’s “World Frontier Technology Conference – Metaverse and Digital Economy Forum,” the “Digital Collection Compliance Evaluation Criteria” (group standard) was officially released, specifying the definition, compliant issuance, and circulation of digital collections from the source. Digital collections are limited to circulation for specific purposes and cannot be listed or privately traded for speculation, money laundering, tokenization, financialization, securitization, etc.

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Beijing: On August 22, 2022, the “Beijing Urban Sub-center Metaverse Innovation and Development Action Plan (2022-2024)” pointed out the need to focus on encryption, rights confirmation, and circulation of non-monetary virtual assets such as digital collections and digital publications, continuously strengthen the research and application of blockchain technology. It aims to leverage the supporting role of blockchain in data sharing and value circulation, and build urban-level data and digital asset infrastructure.

Shanghai: On June 24, 2022, the “Shanghai City Cultivation of Metaverse New Track Action Plan (2022-2025)” proposed to pilot the establishment of a digital asset trading section in the Shanghai Data Exchange, cultivate a sound digital asset factor market, and promote the standardized development of the digital creative industry. It plans to gradually improve the compliant trading mechanisms for digital assets, digital artworks, digital film and television copyrights, strengthen risk supervision, explore the application of digital currency, and establish a multi-party participation and interconnection digital creative alliance chain system. It supports original content platforms, trading platforms, and artists to participate in global digital art creation, transactions, and international standard-setting.On July 12, 2022, Shanghai released the “14th Five-Year Plan for the Development of the Digital Economy in Shanghai,” which supports the exploration of NFT trading platform construction and the advancement of digitalization of NFT assets, global circulation of digital IP, and digital rights protection in Shanghai. The plan also focuses on developing blockchain business models, open-source platforms, and commercial models such as NFT, and accelerating the digital transformation and application of virtual digital assets, art, intellectual property, games, and other fields. The plan supports the formation of blockchain alliances across institutions and industries to research and develop key industry standards and protocol frameworks.

On August 24, 2022, the Shanghai Digital Exchange issued the “Shanghai Data Exchange Digital Asset Management Specification (Trial),” which mainly covers rules on digital asset registration, announcements, and the rights and obligations of participants. This specification aims to achieve compliant and orderly operation of the digital asset sector.

In Fujian:

On March 31, 2022, the China Engineering and Technology Co., Ltd. International Committee, in collaboration with the China Technology Market Association International Technology Cooperation Committee, the Digital China Research Institute (Fujian), and the Fujian Property Rights Trading Center, launched the Haixia Chain Blockchain Underlying Technology Service Platform. It is currently deployed on more than 20 digital collectible platforms.

In Hainan:

On January 29, 2023, in order to develop Hainan as a free trade port and promote the development of the digital economy, the Hainan Provincial Government released a notice on strengthening the regulation of digital collectible risks. The notice highlights the risks associated with digital collectibles, such as fraud, money laundering, pyramid schemes, and illegal fundraising. It calls for strengthened cooperation and the formation of a coordinated regulatory mechanism across departments to prevent regulatory risks related to digital collectibles.

In Zhejiang:

On April 22, 2022, the relevant departments of the Hangzhou Municipal Government in Zhejiang Province promoted the establishment of the first standardized trading platform for digital collectibles, “Virtual Mi Cang,” which was officially launched.

On December 5, 2022, Zhejiang Province issued the “Zhejiang Meta-Universe Industry Development Action Plan (2023-2025)” to enhance blockchain infrastructure construction, strengthen security and privacy computation, efficient collaboration between on-chain and off-chain entities, and smart contract auditing for cross-chain interoperability. It aims to accelerate the development of the value of data elements and build regional and industry-level data trading platforms, exploring the construction of digital asset trading scenarios based on NFT.

In Guangdong:

On October 17, 2022, organizations such as the Guangdong Internet Association Blockchain Professional Committee compiled the “Compliance Operations Guidelines for issuing NFT digital collectibles.” The guidelines state that (1) companies or platforms minting and issuing NFT digital collectibles should have certain qualifications or licenses. (2) Units or platforms engaged in the operation of NFT digital collectibles as artworks need to be evaluated or reviewed by third parties. (3) The issuer refers to the issuing unit or individual who entrusts the minting and issuance of NFT digital collectibles. If the issuer is a company, it should have certain qualifications or licenses; if the issuer is an individual, specific conditions should be met. (4) When minting and issuing two-dimensional works, the documents specified in the guidelines must be provided. (5) When minting and issuing electronic cultural and creative artworks, the documents specified in the guidelines must be provided.

Sichuan

On July 8, 2022, the General Office of the People’s Government of Sichuan Province released the “Implementation Plan for Creating a National All-Around Tourism Demonstration Zone in Sichuan Province”. It emphasized the improvement of management and service quality in scenic areas by focusing on internal quality and external reputation. It aims to promote the development of key branded tourism attractions and innovate the development of digital collections and other digital experiential products. The goal is to optimize service supply and create a number of world-class tourist attractions with rich cultural heritage.

Henan

On November 10, 2022, the Henan Provincial Local Financial Supervision and Management Bureau issued a “Risk Warning on Digital Collection Investment”. The warning points out that several digital collection trading platforms are using the guise of “financial innovation” to conduct new types of financial fraud through digital collection transactions.

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