China’s Supreme People’s Procuratorate Examines Legal Issues of NFTs Amid Booming Digital Economy

China’s Supreme People’s Procuratorate has turned its attention to the legal challenges associated with non-fungible tokens (NFTs), amidst the booming digital economy, according to an announcement made on its website.

As new-age technologies like blockchain and concepts like the “metaverse” gain global traction, emerging applications like NFTs have become the focus of market attention. NFTs, essentially digital asset certificates recorded on the blockchain, represent a new area of application for blockchain technology and have significant development potential.

However, as an emerging field, the laws and regulations related to it are still in nascent stages. Alongside the burgeoning interest in NFTs, there are increasing concerns about potential financial, management, and cyber security risks, with legal risks being a particular focus for procuratorial agencies.

Wang Xiafang, one of the experts cited in the report, urged judicial authorities to accurately discern between innovative development and unlawful activities. It is crucial to both protect genuine innovation and promptly identify and penalize fraudulent activities masquerading as innovation, to prevent the phenomenon of “bad money driving out good”.

Sun Shan, another expert, highlighted the role of copyright compliance governance on trading platforms, especially in situations where the creator and the minter of NFTs are not the same entity. The ideal scenario is when the creator and the minter are the same, but if not, it’s essential for the platform to ensure copyright compliance.

Ruan Shenyu, also contributing to the discussion, clarified the ownership rights of consumers in terms of NFTs. From a property rights perspective, consumers do not have full ownership of the NFT digital assets in the traditional legal sense. They cannot prevent others from accessing, copying, or disseminating the digital assets linked to their NFTs. What consumers do have is an exclusive right that prevents others from unauthorized alteration of the NFT’s ownership recorded on the blockchain.

The Supreme People’s Procuratorate is keen to engage experts and practitioners in a broad discussion on the legal status and risk management of NFTs, highlighting the significant interest and concern surrounding this emerging technology in China’s legal circles.


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China expands digital yuan usage for cross-border trade

China is expanding the use cases for its central bank digital currency (CBDC), the digital yuan, also known as e-CNY, to promote cross-border trade in its Belt and Road initiative. The digital yuan was one of the first CBDCs to be developed and widely tested, with the government having expanded its testing parameter to include multiple cities and millions of people.

Xuzhou, a trade hub in Jiangsu province, plans to promote the use of e-CNY to pay for services and storage charges for goods carried by cross-border trains, according to a plan promoting the use of the Chinese digital currency in cross-border trade that was issued in the city. There are 18 regular cross-border rail connections from Xuzhou to 21 nations in Asia and Europe, making it an ideal location to pilot the use of e-CNY in cross-border payments.

The Hong Kong Monetary Authority (HKMA) is also testing the digital yuan as a cross-border payment tool in the Guangdong-Hong Kong-Macau Greater Bay Area. “The HKMA is working with mainland’s central bank, the People’s Bank of China, to test the digital yuan as a cross-border payment tool in Hong Kong,” said HKMA deputy chief executive Darryl Chan. The Chinese government hopes to improve efficiency and reduce the cost of cross-border transactions with these pilot projects.

Jiangsu province has been proactive in promoting digital yuan use cases, with Changshu, another city in the province, announcing that it will pay civil servants and people who work for public institutions using digital yuan. The Chinese government has ramped up its CBDC efforts at a time when the international trade markets are moving away from the standard U.S. dollar. Recently, China has completed multiple trade treaties with the likes of Russia and India based on their national currency over the U.S. dollar.

While the digital yuan has not yet been officially launched, the government’s efforts to test and expand its usage suggest that it is moving closer to a launch. The expansion of the digital yuan’s use cases for cross-border trade is part of a broader trend towards the digitalization of currencies, with other countries also exploring the use of CBDCs. China’s efforts in this area may give it a competitive advantage in the international trade markets, particularly as countries seek to diversify away from the U.S. dollar.

In addition to its use in cross-border trade, the digital yuan may also have implications for domestic payments in China. The Chinese government plans to use the digital yuan to reduce its dependence on the traditional banking system and to increase financial inclusion for those who are currently unbanked. The success of the digital yuan could also help China to expand its economic influence in the Asia-Pacific region and beyond, as other countries adopt its use in cross-border trade and potentially even domestic payments.


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China and Singapore establish task force for green finance cooperation

China and Singapore have joined forces to establish a task force aimed at deepening bilateral cooperation in green and transition finance. The Monetary Authority of Singapore (MAS) announced the collaboration with the People’s Bank of China (PBC) in creating the China-Singapore Green Finance Taskforce (GFTF). The two major Asian economies seek to develop a set of financial standards, products, technologies, and definitions to support a low-carbon future in the region.

The GFTF will facilitate greater public-private sector collaboration and create concrete initiatives to catalyze capital flows to support a credible and inclusive transition to a low carbon future for both countries and the region. Public-private participants from China and Singapore will work together to co-develop the necessary initiatives. According to Gillian Tan, the assistant managing director and chief sustainability officer of MAS, this collaboration is vital in ensuring that both countries’ financial sectors remain sustainable in the long term.

Initially, the GFTF will focus on finding common ground for taxonomies and definitions regarding each other’s existing transition activities. The task force will also strengthen sustainability bond market connectivity, which includes two-way access to green and transition bond products. MAS and PBC will collaborate on this initiative to ensure that sustainable finance adoption is more widely accepted and accessible to all stakeholders in the region.

The GFTF’s technology initiative will involve MetaVerse Green Exchange, a licensed crypto exchange from Singapore, and Beijing Green Exchange, a Beijing municipal government-approved company. The two companies will help facilitate sustainable finance adoption and pilot digital green bonds with carbon credits. This initiative aims to promote sustainable finance adoption by providing more accessible and user-friendly digital platforms for investors and other stakeholders.

Chinese banks are reportedly opening bank accounts for regulated crypto companies, with several acting as a payment layer for the crypto platforms. The state-owned Bank of Communications is in talks to open accounts for regulated companies. Additionally, Hong Kong’s largest virtual bank, ZA Bank, will act as the settlement bank for crypto companies, according to a report by the Wall Street Journal. This initiative aims to provide more opportunities for crypto companies to access the necessary funding for their operations while ensuring that the financial system remains safe and stable.

In conclusion, the China-Singapore Green Finance Taskforce (GFTF) is a significant step towards greater collaboration in green and transition finance initiatives in the region. The task force’s focus on developing financial standards, products, technologies, and definitions will enable the region to make significant strides towards a low-carbon future. The involvement of public and private participants from China and Singapore is vital in ensuring that the region’s financial sector remains sustainable in the long term. Additionally, the GFTF’s technology initiative involving MetaVerse Green Exchange and Beijing Green Exchange aims to promote sustainable finance adoption by providing more accessible and user-friendly digital platforms for investors and other stakeholders.


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US National Security at Risk Due to China’s Dominance in Mobile Payments, says former State Department Official

Former Department of State official Anja Manuel warns that if the US loses its dominance in financial innovation and payments, it could impact its national security policy, specifically on sanctions. Manuel stated that China is catching up on dominance in mobile payments, which could make enforcing sanctions against “bad actors” like Iran or North Korea more challenging. (Read More)


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US National Security at Risk Due to China Dominance in Mobile Payments, says former State Department Official

In a Twitter Spaces discussion with Coinbase CEO Brian Armstrong and listeners, former Department of State official Anja Manuel cautioned that the US’s ability to enforce sanctions on “bad actors” like Iran or North Korea could be threatened if it fails to maintain its leadership in financial innovation and payments. According to Manuel, the US’s status as one of the largest global leaders in payments enables it to enforce sanctions on countries and entities that are deemed to be a threat to national security. However, China seems to be catching up in mobile payments, both in sophistication and scale. If China’s payments solutions gain a dominant foothold in the developing world, enforcing sanctions could become significantly more challenging.

The Office of Foreign Assets Control of the Treasury Department enforces US sanctions, including sanctions on crypto wallets related to Russian nationals and groups’ involvement in the war on Ukraine. Manuel acknowledged that sanctions generally work in a world of traditional banks and responsible blockchain firms, but they are less effective when financial technology firms are available to individuals looking to circumvent restrictions.

There are several reasons why maintaining US dominance in financial innovation and payments is essential for national security. First, the ability to enforce sanctions against countries deemed to be a threat to national security is critical. Sanctions are a key tool in deterring countries from pursuing policies that threaten US interests. Second, financial innovation and payments are critical for US economic growth. The US’s ability to innovate and create new technologies has been a key driver of economic growth for decades.

The US government has historically played a significant role in fostering innovation and supporting the growth of new technologies. However, there are concerns that the US is losing ground to other countries, particularly China. China has made significant investments in technology and innovation and has developed a reputation as a global leader in several areas, including mobile payments.

To maintain its leadership in financial innovation and payments, the US must continue to support the growth of new technologies and create an environment that fosters innovation. This will require a significant investment in research and development, as well as regulatory frameworks that support the growth of new technologies while also protecting consumers and national security.

In conclusion, the US’s ability to maintain its leadership in financial innovation and payments is critical to its national security. If the US loses ground to other countries, particularly China, enforcing sanctions and deterring countries from pursuing policies that threaten US interests could become much more challenging. The US must continue to invest in research and development and create regulatory frameworks that support innovation while also protecting national security.


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Conflux to Deploy Uniswap v3 on Its Blockchain

Conflux, a regulatory-compliant public blockchain based in China, is looking to deploy Uniswap v3 on its network. This move is aimed at offering millions of potential new users access to the popular decentralized exchange, especially in China and Asian markets. According to Conflux, the network experienced a surge in traffic in the first quarter of 2023, and the deployment of Uniswap v3 would be an important milestone in the platform’s development.

The deployment of Uniswap v3 on Conflux would also provide incentives for projects building on top of the platform. Specifically, the creation of liquidity pools for CFX token trading pairs, including CFX-USDT, CFX-BTC, and CFX-ETH, with a total worth of $2 million locked for two years. The Conflux Foundation would also provide $1 million in liquidity incentives.

In addition to the potential market reach and incentives, Conflux is partnering with China Telecom to develop a blockchain SIM card. This blockchain SIM (BSIM) will provide a secure place to store digital private keys, and users can call upon the signature to transfer money to other users. The BSIM will also feature a “one-click direct check” function that enables users to check for transaction information and status progress in real-time.

Conflux is confident that the deployment of Uniswap v3 on its network would be a significant step towards expanding the platform’s reach and providing new opportunities for projects building on top of it. Additionally, the move could help to strengthen the Asian crypto market in the face of regulatory crackdowns in the United States and Europe.

According to Conflux, China is one of the most mature markets in Web3, with 84% of worldwide blockchain applications submitted in the country compared to 11% and 14% in the UK and the US, respectively. The blockchain platform believes that exposure to the Chinese market is important for all projects, and regulatory crackdowns in the US and Europe could further bolster the growth of the crypto industry in Asian markets.

Ambre Soubiran, CEO of institutional crypto market data provider Kaiko, shares a similar view, noting that Hong Kong is becoming an increasingly important center for crypto assets trading and investment due to its more favorable regulatory environment. Over 80 crypto companies are reportedly planning to establish an office in Hong Kong, which could provide a crypto bridge to mainland China.

In conclusion, Conflux’s decision to deploy Uniswap v3 on its network could bring about significant benefits for the platform, as well as for the wider Asian crypto market. The move would enable access to millions of potential new users and provide incentives for projects building on top of the platform, while the partnership with China Telecom to develop a blockchain SIM card could offer new opportunities for secure transactions and real-time tracking of transaction information.


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Chinese state company launches crypto funds

It has been claimed that a large state-owned corporation in China would be creating new cryptocurrency funds, which indicates the company has a more optimistic position on the sector than was previously believed. According to a local news outlet that focuses on technology, 36Kr, CPIC Investment Management, which is a subsidiary of China Pacific Insurance (CPI), is teaming up with investment company Waterdrip Capital to develop two cryptocurrency investment funds.

CPI is the second-largest property insurance firm on the Chinese mainland, and it is owned by the Chinese central government, the government of the Shanghai city government, and China Securities Finance. Both of the new crypto funds, known as the Pacific Waterdrip Digital Asset Fund I and the Pacific Waterdrip Digital Asset Fund II, are venture capital funds that will handle proof-of-stake digital assets. These funds were created by the same company. Investors from institutions as well as rich individuals will be sought for by both funds.

Blockchain-related initiatives and cryptocurrency firms might get financial backing from the international investment firm known as Waterdrip Capital. It was established in 2017, and it is well-known for its support of the Chinese cryptocurrency mining business as well as its investments in initiatives such as Peaq, a decentralized Web3 network built on Polkadot.

According to a tweet posted by Waterdrip Capital on Monday, the launching of two joint cryptocurrency funds by CPIC Investment Management and Waterdrip Capital is tied to the adoption of incentive policies relating to virtual assets by the Hong Kong government. The statement was sent in response to Waterdrip’s announcement that it will be partnering with CPIC Investment Management to create the funds.

This revelation comes at a time when the government of Hong Kong is becoming more dedicated to establishing local cryptocurrency infrastructure. In doing so, the government hopes to differentiate its approach to cryptocurrency regulation from China’s prohibition on cryptocurrencies, which will be imposed in 2021. At the end of March, there were rumors circulating online that Chinese state-owned banks were showing interest in several cryptocurrency companies based in Hong Kong.

In recent years, the government of China has taken a harsh position against cryptocurrencies, with prohibitions placed on initial coin offerings, cryptocurrency trading platforms, and mining operations, among other cryptocurrency-related activities. The fact that a state-owned corporation has decided to offer cryptocurrency funds, on the other hand, points to a more bullish picture for the sector.

China has been hard at work developing its very own kind of digital money, which it refers to as the digital yuan, and it is now undergoing testing in a number of different places. China’s bigger objective is to become a leader in the digital economy and to minimize its dependency on the US currency. One step toward achieving this goal is the creation of the digital yuan.

In spite of China’s past position on cryptocurrencies, this action by a state-owned corporation implies that China’s views about the sector may be shifting. It is not yet clear if other corporations in China will follow this example and form their own cryptocurrency funds or whether this action is an isolated incident.


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China and Malaysia discuss Asian Monetary Fund

In recent years, a number of Asian countries have shown an interest in distancing themselves from the United States dollar and the International Monetary Fund (IMF), both of which have long had a preponderant position in the international monetary system. One of these nations is Malaysia, and the Malaysian central bank has been collaborating with the People’s Bank of China to facilitate trading in both of their countries’ respective currencies.

Anwar Ibrahim, the Prime Minister of Malaysia, made the announcement on April 4 that China was willing to consider the possibility of establishing an Asian Monetary Fund. The concept of such a fund was discussed during a meeting that took place the week before in Hainan, which is located in China.

The proposed fund will assist Asian countries in reducing their reliance on the United States currency and the International Monetary Fund (IMF). This action is being seen as a reaction to worries about the economic hegemony of the United States and the dangers connected with the use of the dollar as the reserve currency of the world.

Reportedly welcoming negotiations on the plan, which may pave the way for a more autonomous Asian financial system, China’s President Xi Jinping is said to have shown enthusiasm about the topic. The establishment of an Asian Monetary Fund has the ability to make available financial resources for the region’s infrastructure development projects, therefore fostering economic expansion.

In recent years, there has been a discernible uptick in the momentum around the movement toward a stronger role for Asian currencies in international commerce. In March, China and Brazil reached an agreement to conduct commerce exclusively in their own national currencies, so fully excluding the use of the US Dollar.

The Asian Monetary Fund that is being suggested is not the first effort that has been made to establish a regional financial organization. The Asian Development Bank (ADB) was founded in 1966 with the purpose of fostering economic growth and alleviating poverty across the region. On the other hand, the Asian Development Bank (ADB) has come under fire for being controlled by the United States and Japan and for having a limited effect in tackling the economic difficulties facing the area.

In conclusion, the proposed establishment of an Asian Monetary Fund is a major step forward in the continuing transition away from the predominance of the United States dollar in the international monetary system. Even though the creation of such a fund would be met with a number of obstacles, there is a possibility that it would provide a method of fostering more monetary autonomy and stability across the Asian area.


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China intensifies focus on blockchain despite cryptocurrency stance

The draft rules that have been developed by China’s Ministry of Industry and Information Technology to strengthen the requirements for the development of blockchain technology by the year 2025 are evidence of China’s increased attention on blockchain technology. In spite of China’s negative attitude toward virtual currencies, the country’s government is actively encouraging the development of its financial technology sector, notably in digital sectors such as blockchain.

The People’s Republic of China has established the year 2025 as the target date for the completion of a number of technological advancements, including the advancement of blockchain and distributed ledger technology. This deadline was included in the “National Economic and Social Development and Vision 2035 of the People’s Republic of China.” The draft rules were made available on the ministry’s website, along with a request for feedback on the topic from “people from all areas of life.”

The purpose of these rules is to make China’s blockchain and distributed ledger technology standards system’s degree of design more transparent. The deadline for comments from the general public on the draft has been extended to April 28.

This is not the first time that China has shown interest in blockchain technology. The plans for a national blockchain research center were announced by the government in February. The center’s purpose is to bring together blockchain-related businesses, developers, and academic institutions in order to investigate fundamental blockchain technologies and grow the blockchain industry.

According to a national white paper, China’s blockchain industry is currently comprised of over 1,400 different companies. Nevertheless, despite the fact that they claim to make up 84% of all blockchain applications filed globally, only 19% of all applications that were filed were approved.

Even though it maintains a wariness toward cryptocurrencies, China is continuing to place a significant amount of emphasis on blockchain technology. This demonstrates China’s dedication to the development of its financial technology industry. Along with other digital industries, such as communications equipment, core electronic components, and key software, the country has its sights set on the blockchain as a potential growth area for the business sector. China has high hopes that it will be able to boost the overall quality and power of its blockchain industry if it follows through with its plans to clarify its blockchain technology standards system by the year 2025.


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FTX Founder Faces New Charges, Including Alleged $40M Bribe

 The founder of the cryptocurrency exchange FTX, Sam Bankman-Fried, is facing a new 13-count indictment, including charges of bribery related to an alleged $40 million bribe to a Chinese government official. The charges stem from a court filing by United States attorney Damian Williams, which alleges that Bankman-Fried and other parties directed the transfer of at least approximately $40 million in cryptocurrency intended for the benefit of one or more Chinese government officials. The transaction was reportedly made in order to influence and induce Chinese officials to unfreeze cryptocurrency accounts at FTX’s affiliate firm, Alameda Research, which held over $1 billion worth of cryptocurrency.

The court filing alleges that Chinese law enforcement authorities froze certain Alameda accounts on “two of China’s largest crypto exchanges” in early 2021. Bankman-Fried was reportedly aware of the freeze and tried numerous methods to unfreeze the accounts, including attempting to transfer cryptocurrency to fraudulent accounts in an effort to circumvent China’s freeze orders. After months of failed attempts to unfreeze the accounts, Bankman-Fried allegedly directed a multi-million-dollar bribe to seek to unfreeze the accounts. After the accounts were unfrozen, Alameda reportedly used the unfrozen cryptocurrency to fund additional Alameda trading activity.

It is unclear which Chinese cryptocurrency exchanges Alameda was using in early 2021, as China officially banned crypto exchanges from providing services in the country back in 2017. However, the court filing alleges that Bankman-Fried was aware of the freeze and attempted to circumvent it through various means.

Bankman-Fried is already facing criminal charges related to the theft of billions of dollars in FTX customer funds facilitated through Alameda Research, as well as alleged illegal political donations. He has pleaded not guilty to eight criminal counts, which could result in 115 years in prison should he be convicted. Bankman-Fried’s trial is set for October 2, 2023.

FTX is a cryptocurrency exchange that was founded in 2019 by Bankman-Fried and Gary Wang. The exchange has quickly become one of the largest in the world, with a daily trading volume of over $10 billion. In addition to its exchange services, FTX also offers a range of other cryptocurrency-related products, including derivatives and tokenized stocks. Alameda Research is an affiliate firm of FTX that engages in quantitative trading and market making. The firm is known for its involvement in the DeFi (decentralized finance) space and has been an active participant in the development of the Solana blockchain.


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