Xiao Sa’s team: Is China’s local NFT really a “shame of digital culture”?

Yesterday, an article “XX tore the “fig cloth” of Chinese NFTs” quickly broke into everyone’s field of vision. The content of the article is not much, but the title is exciting enough. In many digital Tibetan communities, we have found great repercussions from this article, and people have been discussing whether this means that China’s local digital collections are “dead” and no longer have room for survival. In order to reduce the panic in the data collection industry , we wrote this article from an objective point of view on the recent regulatory developments, whether a large factory is “repurchasing” data collection, and the way to survive in data collection. It is only for the reference of people in the industry.

【Supervision dynamics】

According to media reports, since July, a number of digital collection platforms have received notices from relevant regulatory authorities and have issued an announcement to close the consignment market. At the end of June, a listed company also closed the Shuizang platform, saying that ” after receiving a notification from the relevant government departments, the platform will close the consignment market until the relevant national laws are improved and allowed .”

It is worth noting that since last year, listed companies carrying out NFTs, digital collections, Metaverse-related businesses, and even publicly disclosing research progress and mentioning the concept of Metaverse have attracted the attention of stock exchanges . For example, at the end of 2021, a company in Shenzhen stated that virtual digital human technology is an integral part of Metaverse-related technologies when responding to investors’ questions on a platform. Related invention patents, and then the company’s stock price rose by the intraday limit, and on the same day, it received a “Letter of Concern” issued by the GEM company management department of a stock exchange, asking it to explain the company’s existing main business, main products and the concept of the Metaverse. Relevance, specific business content and product form involved in virtual digital human technology, related business development and income ratio, etc.

In the first half of this year, a domestic listed company received a request from a domestic stock exchange because of its relatively scattered customers in the information technology service industry, one of the businesses that achieved revenue growth, high frequency of order demand, short business cycle and small single service amount. The “Letter of Concern” sent by it. In the announcement on the reply to the letter of concern, the company disclosed relevant information about the digital collection avatar project and the digital collection virtual asset management system it operates .

According to Article 14 of the Measures for the Implementation of Self-Regulatory Measures and Disciplinary Actions of the Shenzhen Stock Exchange (Revised in 2022) and Article 9 of the Measures for the Implementation of Disciplinary Actions and Regulatory Measures of the Shanghai Stock Exchange (Revised in 2019), the concern letter belongs to One of the self-regulatory measures of the stock exchange. Obviously, from the perspective of the issuing body, the letter of concern is not an administrative penalty, but its impact cannot be ignored. The reason is that the reply letter needs to be disclosed to public investors in accordance with regulatory requirements. The results of the disclosure are likely to cause stock price fluctuations and may also have a negative impact on the company’s reputation.

Let’s look at Hong Kong. In June this year, the Hong Kong Securities Regulatory Commission publicly reminded investors of the risks associated with digital collections . “Digital collections, like other virtual assets, face higher risks, including illiquidity in the secondary market, price volatility, lack of transparency in pricing, hacking and fraud risks.” The Securities and Futures Commission recently noted that some digital collections cross over to collectibles Demarcations with financial assets, such as having similar subdivisions or homogeneous collections of ‘securities’ or, in particular, interests under ‘collective investment schemes’. At the same time, the Hong Kong Securities and Futures Commission also stated, “In general, if a digital collection is a collection that truly exists in digital form, the activities related to it do not fall within the scope of the SFC’s supervision. “It can be seen that this is consistent with the spirit of the three associations’ initiative, that is, to affirm that NFT has a certain value, and at the same time strictly prevent securitization risks .

【Legal Risks of NFT Repurchase】

When the equity of the Shuzang platform changes or goes out of business, friends who hold Shuzang will ask whether theplatform or its successor can repurchase NFT? We analyze this issue in detail.

The so-called repurchase, also known as compensatory trade , originally means that one party to the transaction, while exporting machinery, equipment or technology to the other party, promises to purchase a certain amount of products produced by the machinery, equipment or technology . This practice is the basic form of product repurchase.In practice, there is also an agreement between the two parties that the exporter of the machine or equipment purchases other products provided by the importer. This is not uncommon in commercial trade.

But in the actual transaction process, repurchase is often used by criminals as a means of illegal fundraising . This is also expressly stipulated in the newly revised “Interpretation of the Supreme People’s Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund Raising”. According to Article 2 of the Judicial Interpretation, the perpetrator does not have the true content of selling goods or providing services, or does not use selling goods or providing services as the main purpose, and illegally absorbs funds by means of commodity repurchase, consignment sales, etc. , on the basis of satisfying other requirements, it can be found to constitute the crime of illegally absorbing public deposits , and thus be punished by the criminal law. In practice, there are cases of repurchase with liquor as the target to absorb funds. In these cases, criminals often repurchase at a much higher price than the original price when repurchasing, and at the same time claim that the liquor is a certain In this case, the act can be evaluated as an act of illegally absorbing public deposits, and the perpetrator needs to bear the corresponding criminal responsibility.

Although Shuzang is not a kind of liquor, if its sales model is similar to the aforementioned liquor, and the agreed repurchase price is higher than the sale price, even if the platform operator argues that it has no intention to illegally absorb public deposits, However, in the eyes of regulators, the behavior is still very likely to be regarded as illegal fund-raising . In addition, it should be noted that in this case, even if the behavior is ultimately determined not to constitute a crime, the financial attributes of Shuzang will be greatly improved during the entire transaction process. In other words, it is equivalent to a This will undoubtedly have an impact on the compliance operation of enterprises .

Therefore, it is necessary for enterprises to be cautious in setting repurchase terms for Shuzang. Not only the repurchase price should not exceed the original price, but also users cannot obtain too excellent permissions by purchasing the NFT, otherwise the benefits brought by the permissions may still be possible. It is regarded as interest , so that the process of selling shuzang is deemed to be enticing by the regulatory authorities, thus making the enterprise have greater criminal legal risks.

[The development path of domestic digital collections from top to bottom]

With the continuous rise of the Internet industry, in the context of the digitalization of the cultural industry, the continuous emergence of new business forms is foreseeable. But in contrast, it is the vacancy in supervision brought about by the legal lag . This is also true for the NFT industry.

At present, the regulatory policy of the digital Tibetan industry is still unclear, and on this basis, positive news and negative news follow. For the former, major manufacturers have stepped down to create their own digital Tibetan platforms, which shows that large manufacturers value the prospects of the digital Tibetan industry. Another example is the “14th Five-Year Plan for the Development of Shanghai’s Digital Economy” recently released by the General Office of the Shanghai Municipal People’s Government. “ , which clearly stated that “support leading enterprises to explore the construction of digital Tibetan trading platforms, research and promote the digitization of NFT and other assets, the global circulation of digital IP, digital rights confirmation and protection and other related formats” will be piloted in Shanghai. Undoubtedly, there is a lot of promotion and support.

But at the same time, the negative news is still constant. For example, on April 13 this year, the “Initiative on Preventing Financial Risks Related to NFTs” issued by China Internet Finance Association, China Banking Association, and China Securities Association . Practitioners in the Tibetan industry took the lead, causing everyone to doubt the compliance and legitimacy of their own business. In addition, recently, news of various Tibetan platforms running away has continued to spread, including a certain platform operated by a Hong Kong listed company. The announcement of the closure of the business has brought a great impact on the digital Tibetan industry that has grown in the cracks, and many users have begun to doubt the compliance of the industry. It is during this storm that the digital Tibetan industry continues to grow .

But even so, Sister Sa’s team still believes that the absence of supervision does not mean that the industry is prohibited, and the chaos in the industry does not mean that the regulatory authorities need to suppress the entire industry . It is true that due to the lack of clear norms of corresponding laws and regulations, many criminals use Shuzang to carry out illegal and criminal activities, but it is not a good thing to say no to the entire industry, or even to stifle the development of the Shuzang industry.

The society needs vitality and innovation, and emerging business formats are the source of energy for the society . We sincerely hope that the regulatory authorities can abandon the simple one-size-fits-all approach, and instead give full play to the role of supervision, take the essence and remove the dross, and let the digital collection industry integrate The general direction of “cultural digitization” will lead to healthy and harmonious development and enrich the spiritual and cultural life of the people.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/xiao-sas-team-is-chinas-local-nft-really-a-shame-of-digital-culture/
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