The Chinese government has reported a staggering 30,000% increase in NFT-related complaints in 2022, with a total of 59,700 unique complaints. This is a significant jump from the 198 complaints received in 2021 and virtually none in 2020. The increase has been attributed to several factors, including the self-regulatory framework of the regional market dominated by big tech firms who oppose secondary trading.
Despite the Chinese government's blanket ban on digital currencies, the non-fiat currency industry has grown rapidly, and many are keen to capitalize on the economic potential of digital collectibles, despite concerns about the industry's legal status. To regulate the industry, Feng Qiya, a member of the Chinese parliament, is proposing to make NFTs the primary topic of discussion at the nation's most important political conference, known as Two Sessions. The proposal aims to prohibit the national "financialization and securitization" of NFTs.
The NFT marketplace Huanhe, operated by Tencent Holdings, recently ceased operations due to an internal dispute. As a result, several Chinese non-financial firms are moving to Hong Kong and other locations in search of legislative certainty to develop and provide services to new consumers. The surge in complaints highlights the need for greater regulatory oversight and certainty in the Chinese NFT market.