China Set to Launch State-Backed NFT Marketplace on Special ‘Cultural Protection’ Chain

China, that is rather infamous for keeping an extremely restrictive approach towards the crypto sector, is taking small steps into exploring the digital assets sector. The country is geared-up to launch an official, state-backed NFT marketplace, that would let Chinese NFT traders to dabble in the space, but under the oversight of China's government. A launch ceremony for this marketplace has been slated for January 1. It will be held in China's capital city of Beijing at a time when the country is yet again, riddled with the COVID-19 crisis.

Called the ‘China Digital Asset Trading Platform', the initiative is aimed at creating a safe ecosystem for the secondary sales of NFTs, which if not monitored, can dangerously expose buyers to hack attacks and scams.

Three state-owned entities — China Technology Exchange, China Cultural Relics Exchange Center, and Huaban Digital Copyright Service Center Co., Ltd — have collectively created this NFT trading platforms, keeping it in alignment with China's laws and regulations, China's Sina News said in its report.

Instead of using an existing blockchain like Ethereum or Solana, the Chinese government has decided to base this NFT platform on a specially curated blockchain, named the ‘China Cultural Heritage Chain'.

The blockchain was reportedly initiated by the China Cultural Relics Exchange Center, aimed at ensuring the copyright protection of the cultural digital sector.

In September last year, China imposed a blanket ban on all crypto-related activities.

The government at the time, had not decided a concrete stance on the categorisation of NFTs.

In this grey zone, the secondary sales of digital collectibles had begun to pick pace in China.

In March this year, WeChat public accounts linked to NFT trading, were blocked by its parent company Tencent.

“In order to prevent the risk of virtual currency trading speculation, the WeChat public platform has recently standardised and rectified public accounts and small programs for speculation and secondary sales of digital collections,” WeChat had said in a statement at the time.

Despite increasing the oversight on the virtual assets sector, China is gradually tapping in to explore the potential of the blockchain technology.

The country is already widely testing its e-CNY CBDC, which is a blockchain representation of China's fiat currency.

This week, the Chinese authorities introduced a feature for existing CBDC users to let them send financial gifts to their friends and family as ‘red packets'. Considered as a symbol of ‘good luck', the ‘red packets' — also called the ‘Hongbao' — are used for presenting people with money as a gesture of luck around festivals in the Asian nation.

China is still not onboard with allowing cryptocurrencies to penetrate its financial systems.

Along with the volatility of the crypto sector and the anonymity of transactions crypto offers, the electricity required to keep crypto-related operations up and running had become a matter of concern for the Chinese authorities before all activities around that sector was banned.