TOUGH RULES FAIL TO COOL INTEREST IN DIGITAL ASSETS

Tech giants find ways to get around the strict regulatory environment on the mainland to cash in on consumers’ craze for non-fungible tokens

When Simon Gao, an engineer in Hangzhou, decided to join a lucky draw to buy a “digital collectible” profile photo on Bilibili last Friday, he did not expect the process to be so difficult.

The video-streaming platform set a high bar for potential buyers, requiring bidders to have logged into the site every single day last year. Gao qualified, but he was still unable to get a profile picture featuring cartoon pigeons, which is stored on the company’s blockchain network.

Interest in non-fungible tokens (NFTs) is as strong in China as anywhere else these days, but Beijing remains wary of the technology. This has led to an unspoken rule among Chinese firms to ditch the term NFT in favour of the more neutral term “digital collectible”. Many tech firms now offer their own digital collectibles on blockchains.

Bilibili is the latest to jump on the bandwagon. It joins other tech giants such as Tencent Holdings and Alibaba Group Holding – the owner of the – in launching

Post its own NFT trading platform. JD.com, Baidu and Xiaomi also sell digital collectibles.

However, the sensitivity over cryptocurrency products in China has led platforms to limit how digital collectibles can be traded.

Unlike NFTs sold on public blockchains around the world, those minted by Chinese tech firms cannot be resold for profit.

That has not dampened consumers’ enthusiasm. Many new digital collectibles minted in China have been sold within seconds after launch.

“You have to be fast enough to get a digital collectible,” said Felix Huang, a graphic designer in Shenzhen who has bought 10 digital collectibles.

Gao, the Hangzhou-based engineer, owns three digital collectibles on Jingtan. He noted that the value of digital assets had so far been limited.

“Currently, the NFTs are just three photos to me. They can neither be used in any circumstances, nor cashed in within the 180-day restriction for transfer,” Gao said.

Jingtan allows NFT owners to transfer their asset to another party 180 days after the purchase. The second owner can transfer it after two years. However, selling the NFTs for money is still prohibited, and ownership is limited to mainland residents who are at least 14 years old.

Bilibili said it would launch a transfer function for its digital collectibles in the future. Tencent, JD.com and Baidu have no such function so far.

Given the regulatory restrictions and the difficulty of snapping up NFTs as soon as they are available, Gao said he was thinking of giving up on buying digital collectibles.

“After all, what is the value of three digital photos that I can’t sell?” he said.