China Draws a Line for NFTs in Its Cryptocurrencies Clampdown, With a Caveat
It is China's fear that its restriction on cryptocurrencies in the country might cost it to miss out on the economic advantages of the NFT boom. Therefore, before the country's crypto crackdown undermines the local NFT business, China plans to make a clear distinction between cryptocurrencies and nonfungible tokens (NFT), much like it did with its digital currency.
In the report by Cointelegraph, the South China Morning Post reports that the Blockchain-based Service Network (BSN), a government-backed blockchain project, is developing systems to help enterprises and people build platforms and apps to administer NFTs.
The project, officially known as the BSN-Distributed Digital Certificate (BSN-DDC), aims to implement non-crypto NFTs by providing application programming interfaces for the building of user portals and applications that accept fiat money as the only form of payment.
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Yifan He, CEO of BSN's tech support provider Red Date Technology, said that the upcoming infrastructure would use an accessible, permission blockchain to enable an on-chain governing body, emphasizing that NFTs have no legal issues in China as long as they are not used with Bitcoin (BTC) or other cryptocurrencies.
"Public chains can't be legally operated within China," he mentioned in his interview with a leading independent digital media resource that covers fintech and crypto news, adding that a trustworthy, low-cost infrastructure is urgently needed to host all nonfungible tokens in the country. NFTs can only be used on "unreliable" private chains in the country without a dedicated, nationwide NFT infrastructure, according to the tech support provider.
Red Date intends to establish a compliant NFT platform that is segregated from the ordinary profile of crypto by allowing a single authority to oversee the infrastructure and act in the event of illicit conduct. Red Date is working with all DDC project partners to make the network as open as possible while remaining consistent with Chinese regulations and legislation, according to Yifan He. On the BSN-DDC network, all gas fees are paid in fiat currency.
BSN's NFT infrastructure is supported by state-owned China Mobile, China UnionPay, and the State Information Centre. According to him, the BSN-DDC will support ten blockchains, including a modified version of Ethereum and Corda, as well as WeBank's Fisco Bcos.
The People's Bank of China announced in June 2019 that it would prohibit access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites, with a ban on overseas exchanges, to crack down on all cryptocurrency trade.