Prosecutors in China plan to crack down on 'pseudo-innovation' in NFT sector

The People's Republic of China's Supreme People's Procuratorate, the national body in charge of criminal prosecution, expressed its opinions on the nonfungible token (NFT) market on May 15. Three authors of the article described how prosecutors see market risks and the benefits of taking them more seriously.

The essay highlights the trend of "securitization" of NFTs, or the shared ownership of one copy by numerous users, which, in the authors' perspective, no longer adheres to the non-reproducibility, indivisibility, and uniqueness requirements.

Prosecutors in China are taking action against "pseudo-innovation" in the NFT business

On May 15, the Supreme People's Procuratorate of the People's Republic of China, the federal agency in charge of criminal prosecution, provided its comments on the nonfungible token (NFT) market. The article's three writers discussed the advantages of taking market risks more seriously as well as how prosecutors see market risks.

In the article, the "securitization" of NFTs—the practise of having several users share ownership of a single copy—is highlighted. From the authors' point of view, this practise no longer complies with the standards of non-reproducibility, indivisibility, and uniqueness.

Prosecutors believe that one concern is the "inflation of prices" on NFTs brought on by marketing strategies including airdrops, blind boxes, and restricted sales. The authors claim the absence of "artistic beauty" and "reasonable pricing mechanism" as the reasons for the inflated prices of some nonfungibles, which is an odd combination of aesthetic and economic research.

The organisation claims that marketing strategies like incentives, dynamic rights, and interests can swiftly turn into ill-gotten pyramid schemes.

A "crackdown on criminal activities," equal focus on governance and punishment, investment in risk research, and law popularisation are all part of the suggested response to these dangers. According to the article, it would be the responsibility of the national prosecutors to distinguish between "true innovation" and "pseudo" and to defend the former.

Despite Hong Kong's continued success in adopting cryptocurrencies, China has not altered its anti-crypto attitude. Furthermore, the nation appears to view artificial intelligence in a negative manner. Early in May, after reportedly utilising ChatGPT to create false news reports, a suspect was caught by local officials and taken into custody in China's Gansu area.

The NFT market "has some potential," but there are hazards associated with it in terms of money, security, and the law, according to Chinese prosecutors. Therefore, in addition to thorough governance, the market also need a crackdown on "pseudo-innovation."