May 23, 2023
By Sharan Kaur Phillora
According to a theoretical research work published by the Supreme People’s Procuratorate of the People’s Republic of China, the NFT market requires proper regulations to ensure safe innovation and ultimate investors’ protection.
Here’s what we know:
The blog post “The Legal Attributes and Risk Governance of NFT under the Background of Digital Economy” recommended risk research and judgment and accurately punishing crimes. Nevertheless, the post highlighted the importance of NFTs in developing cultural stock resources.
“As an application form of NFT, digital collections have virtual asset attributes. Blind and disorderly development can easily lead to illegal fundraising, Multiple risks such as fraud and malicious hype must be paid attention to urgently,” the post noted.
The Chinese prosecutors noted that investors should be wary of NFT projects that hype their projects only to raise money through ICO-like programs. Notably, the Chinese central bank banned ICOs after the Ethereum ICO hype, deeming it an illegal fundraising practice. Over the years, the People’s Bank of China (PBoC) has issued several bans on crypto exchanges, among other related activities, in its jurisdictions.
According to Chinese prosecutors, NFT creators hide in plain view through airdrops, blind boxes, limited sales, and synthesis. The authors added that the NFT’s initial hype takes advantage of the fact that there is no reasonable pricing mechanism and sufficient value support behind the inflated prices.
With NFT creators able to create a smart contract with rules enabling them to collect taxes per transaction, the Chinese prosecutors noted that most NFT projects evolve into illegal pyramid schemes.
As a result, the prosecutors urged NFT creators to report every financial activity in accordance with the law to prevent NFT-related crimes.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
