Chinese Legal Authorities Issue Crackdown on NFT Market’s Pseudo-Innovation

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China’s highest legal prosecution agency, the Supreme People’s Procuratorate, recently shared its insights on the NFT (non-fungible token) market. In a published article, the authors elaborated on the growing risks and the necessity for more stringent enforcement measures.

Securitization in NFTs: A Growing Concern

One of the prime concerns presented in the article is the trending “securitization” in NFTs, wherein multiple users hold a shared ownership of a single copy. The authors argue that this practice contradicts the fundamental attributes of NFTs, which are unique, indivisible, and non-reproducible.

The Call for a Crackdown and Enhanced Governance

To tackle these risks, the prosecutors proposed a crackdown on criminal activities, emphasizing the importance of both punishment and governance. They urged for increased investment in research to better understand and control risks, and for promoting public understanding of the law. The prosecutors’ mission appears to be focused on distinguishing genuine innovation from deceptive practices and safeguarding authentic advancements in the field.

China’s Persistent Stance Against Cryptocurrencies and AI

Despite the increasing adoption of cryptocurrency in Hong Kong, mainland China maintains a firm opposition towards cryptocurrencies. A similar stance is also held against Artificial Intelligence (AI). A case in point from early May saw the arrest of an individual in China’s Gansu district, who allegedly used ChatGPT to generate false news articles.

Addressing Financial, Security, and Legal Risks

Chinese prosecutors have voiced their concerns about the financial, security, and legal risks associated with the NFT market, despite recognizing its potential. They underscore the need for robust governance and a stringent approach towards deceptive innovations. This call to action indicates China’s drive to ensure the safety and integrity of its emerging digital markets.

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