The hype fades The demand for compliance development of the digital collection industry is getting higher

As the “Financial Knowledge Popularization Month” in September 2022 jointly carried out by the four departments of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the Cyberspace Administration of the People’s Republic of China is nearing its end, the reporter noted that this year’s related topics on prudent digital asset investment, beware of digital collection fraud and speculation have become the focus of attention of various institutions.

On September 28, the reporter searched for “digital collection” in the black cat complaint, showing that there were 1725 relevant results, involving withdrawals, refunds, runaways, false publicity, customer service inaction, and arbitrary closure of the collection circulation market.

The digital collection market has ushered in rapid development in China in the past two years, and at the same time, it has also made its compliance development problems more prominent: digital collection platforms have stopped issuing, selling, hype, fraud, running away, etc., and the call for compliance development of the industry is getting higher and higher.

On the one hand, the “soft law” of industry self-discipline and supervision has been gradually introduced, and the Guidelines for the Compliance Evaluation of Digital Collections (Group Standards), the Initiative on Preventing NFT-related Financial Risks, and the General Standard for Digital Collections 1.0 have been released; On the other hand, Shanghai, Quzhou, Fuzhou, Qingdao, Mengzi and other cities have released digital collections related to the image of the city, and the government-led cooperation with the digital Tibet platform has highlighted the characteristics.

On September 29, Zhu Youping, rotating chairman of the Blockchain Special Committee of the China Communications Industry Association (hereinafter referred to as “CCIAPCB”), pointed out in an interview with reporters that there are many digital collection platforms in China’s market, but digital collections are only issued and not traded, just like “lame cripples”, the situation is very embarrassing. Digital collections are one of the landing applications of cultural digitalization, and the compliance of the industry is imminent.

Compliance requirements are high

On September 28, the reporter searched for “digital collection” in the black cat complaint, showing that there were 1725 relevant results, involving withdrawals, refunds, runaways, false publicity, customer service inaction, and arbitrary closure of the collection circulation market.

“As an innovative business, digital collections are still in the concept trial and error period, but have entered the second stage of the concept trial and error period.” Zhu Youping pointed out that the first stage of the concept trial and error period is the stage of fanatic rise, when the digital collection has just emerged, many digital collections can often be ‘seconds of light’ at the beginning of issuance, and the second stage of the concept trial and error period is the stage of returning to rationality, at this stage, it is more necessary to fight for strength and practical value.

CCIAPCB incomplete statistics, as of the first half of this year, China has nearly 2,000 various types of digital and Tibetan platforms. Third-party platform statistics show that in the first half of 2022, 640 new digital and Tibetan platforms in China were added.

“Compliance in the digital collections industry is imminent.” Zhu Youping said that at present, on the one hand, China has a large number of digital collection projects, on the other hand, China’s digital collection is only issued without trading, just like “lame cripples”, the situation is very embarrassing.

As the Chinese version of the NFT, the digital collection comes with financial attributes. Previously, a digital collection called “Dunhuang Feitian” launched by the digital Tibet platform Whale Detective and the Dunhuang Institute of Fine Arts was listed for nearly one million resale prices on the second-hand trading platform Idle Fish, exposing the financialization risk of the digital collection.

In April this year, the China Internet Finance Association, the China Banking Association, and the Securities Association of China issued the Initiative on Preventing NFT-related Financial Risks, pointing out that it is necessary to resolutely curb the trend of NFT financialization and securitization.

On September 4, the “Compliance Evaluation Guidelines for Digital Collections” (Group Standards) was officially released, which for the first time regulated the definition, compliance issuance and circulation of digital collections circulating in the domestic market, and clearly stated that digital collections are limited to the purpose of use, and cannot carry out speculation, money laundering, tokenization, financialization, securitization and other listing or private illegal transaction circulation.

Zhu Youping believes that digital collections belong to the early stage of innovative business development, in view of the current status quo of China’s laws, regulations and policy supervision, the approval of financial transaction licenses is very strict, and digital collections must be compliant: First, they cannot use “air coins” to use the “cutting leeks” model to engage in digital collections, and digital collections must have clear cultural asset endorsements; Second, digital collections must have a clear definition of digital copyright or intellectual property rights; Third, digital collections can only be issued and cannot circulate in the financial market; Fourth, we must not engage in fraud, pyramid schemes, illegal fund-raising, tax evasion, money laundering, and other activities that do not conform to state laws and regulations.

The industry is actively self-disciplined

Although the compliance development of the digital collection industry has become a consensus, the “how to be compliant” has not been conclusive. However, the “China Times” reporter noted that the digital collection platform is actively self-discipline by participating in the formulation of industry standards, promoting the academic construction of the industry, and organizing compliance discussions.

On September 6, CCIAPCB jointly released the Common Standard for Digital Collections 1.0 (hereinafter referred to as the “Standard”). As the first standard at the level of the digital collection industry, the Standard stipulates the basic general requirements such as terms, definitions and abbreviations, constituent subjects, basic principles, construction design, operation and implementation, technical safety and rights protection of digital collections. The reporter noted that the only digital collection platform such as art, tide totem, and golden digital collection is also among the drafting units.

On September 22, at the “Cultural Tourism China Metaverse” cloud briefing, the National Network Culture Standardization Technical Committee announced the official establishment of the National Network Culture Standardization Technical Committee Network Art Standard Working Group, and the only art is also one of the co-initiators.

“For digital collection platforms, qualification compliance and business compliance are the key directions for the development of future compliance.” On September 28, Tong Shitian, the only art CEO, said in an interview with the “China Times” reporter that compliance is the premise for the sustainable development of the industry, and the industry has entered the stage of “leaving gold in the sand”, and eventually a small number of compliant platforms that give full play to the real value of digital collections will be left.

How do you unlock the true value of your digital collections? Tong Shitian pointed out that the first is to empower the innovative development of culture, and the other is to promote the transformation of digital collections from virtual to real, including empowering industries and empowering brands.

“Empowering culture refers to promoting the innovative development of culture and international communication; Empowering industry refers to promoting the in-depth linkage between the copyright works of the platform and the industry, and making efforts to build Chinese brands; Empowering a brand refers to creating a digital collection marketing model through the linkage between the platform and the brand. Tong Shitian further said that recently, Shanghai, Quzhou, Fuzhou, Qingdao, Mengzi and other cities have released digital collections related to the image of the city, innovating and presenting urban culture through digital means, which proves that major cities have realized that digital collections and IP are a complementary relationship, and digital collections can help cities build and build the value of IP.

Tong Shitian introduced that digital collections, as a new form of culture, have their own heat and flow. The value of digital art, in addition to appreciating and collecting, is also promising in helping the development of the real economy. At present, the only art is already exploring the level of empowering industry and brand marketing, making it more deeply connected with the real economy, expanding the application boundary of digital art, thereby releasing the value of art and becoming a new growth point of the digital economy.

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