China monitors the metaverse with state-backed NFT network

China is launching a state-backed NFT network with the purposes of extending its controls over the internet as it morphs into Web3, according to Reuters.

Without specifically using the term NFT, China’s State Information Centre is working on the Blockchain-based Service Network (BSN) that relies on what it calls Distributed Digital Certificates (DDCs).

The DDCs are effectively NFTs that run on a Chinese supervised blockchain, Reuters reports.

Cryptocurrencies as well as NFTs that are run on crypto-based blockchains such as Ethereum are banned in China, so in order to pay for the DDCs using the BSN platform, users must pay in Chinese yuan.

Despite the Chinese ban on cryptocurrencies, He Yifan, chief executive of Red Date Technology, a technical partner of BSN told South China Morning Post that NFTs “have no legal issue in China”, as long as their program interfaces are not dependent on crypto.

According to CoinDesk, the BSN-DDC network is making 10 localised versions of Open Permissioned Blockchains available, with restrictions as to who can use them.

“If we look at the environment in China, this is the only way to launch NFTs,” said He.

Ledger Insights reports that the BSN launched the network with the purposes of simplifying blockchain hosting for SMEs and making them more affordable. NFTs are also reported to be easier to mint using the network.

PR Newswire highlights eight of the platform partners that BSN announced during the soft launch of the network, including auction house Rong Bao Zhai and EY Blockchain.

As financial technology advances, and global interest in central bank digital currencies increase, The Center for a New American Security (CNAS) asserts that the Chinese Communist Party (CCP) is seeking to “strengthen its digital authoritarianism” through The People’s Bank of China’s efforts to release a central bank digital currency.

This digital authoritarianism is set to increase according to Reuters as the government-controlled BSN system heightens the risk of government surveillance.

“Products that enable any government to have 360-degree awareness of all digital ownership and activity in real time also offer the technological foundations for overreach, abuse and tyranny," Yaya J. Fanusie, former CIA analyst and adjunct senior fellow at the Center for a New American Security writes for Reuters.