March 20, 2023
By Tsering Namgyal
Consumer complaints in China about non-fungible tokens (NFTs) over pricing and service problems surged 300-fold in 2022, according to the top market regulator the State Administration for Market Regulation (SAMR).
The South China Morning Post reported that the number of NFT-related complaints filed through an official SAMR platform reached 59,700 last year, a significant jump from the 198 cases in 2021.
Complaints include refund refusals, price manipulation and extra fees.
“Problems arise in nascent business models, which makes it increasingly difficult for regulators,” the newspaper quoted SAMR as saying.
However, NFT-related complaints in China made up a small fraction of the 13 million cases the SAMR received last year.
Most negative comments involved other internet and tech business industries, including cross-border e-commerce, which was the subject of 334,500 complaints, up 42.6 per cent year on year. Many complaints were about counterfeit products and sellers’ failure to meet warranty commitments.
In mainland China, NFTs are generally referred to as “digital collectibles” and can only be bought with yuan, because of Beijing’s ban on cryptocurrencies.
Some top companies in China have started to retreat from the sector. Last summer, Tencent Holdings announced it was shutting down Huanhe, its NFT platform. It stopped sales last year and will cease all operations in June.
The news comes on the heels of the crypto winter which led to recent scandals in the crypto industry including the collapse of cryptocurrency exchange FTX in November.
But, on the whole, Beijing remain supportive of blockchain as a technology after President Xi Jinping endorsed the technology in 2019, even though the Chinese authorities has put a ban on cryptocurrencies.
In January, China launched a fully-regulated “digital asset trading platform” to facilitate transactions of intellectual property and NFTs.
About the author
Tsering Namgyal is the chief content officer of the Blockchain Asset Review.