China NFT Weekly: China’s Crackdown on Crypto Continues

Feb 25, 2022, 13:26pm2022/02/25 18:28:23 Yuke Xie

Digestible news on the latest developments across the fields of NFT, blockchain and metaverse in China, compiled for you every week by Pandaily.

This week: Huobi plans for return to the U.S. months after shuttering its China business, China’s Supreme Court adds digital currency to list of illegal fundraising methods, CasperLabs will power distributed digital certificates and blockchain applications in Fuzhou, China, and more.

Companies

Huobi Plans Return to U.S. Months After Shuttering China Business

Chinese crypto exchange Huobi plans to reenter the U.S. market, months after it shut down its business in China to comply with a local regulatory crackdown.

Huobi co-founder Du Jun said in a translated interview published Tuesday by CNBC that he expects asset management to be a bigger business than exchange, which “echoes the traditional finance market as well.”
Huobi lost about a third of its revenue from September to December 2021, when it expelled China-based accounts to comply with a September 24 ban on crypto-related transactions in the country. Earlier in the year, after an initial crackdown from Chinese authorities in May, Huobi had scrambled to move its China staff overseas.
Huobi Group, of which the Huobi Global exchange is part, entered the U.S. in 2018 and exited in December 2019, citing regulatory concerns.
In 2020, Huobi Tech acquired a trust license in Nevada through a wholly owned local subsidiary. Huobi Tech is a Hong Kong-listed entity that is separate from Huobi Group, although the two share a common founder, Leon Li.
Huobi Group officially announced it set up an Asia-Pacific region headquarters in Singapore in November. The company is also looking for a base in Europe. (CoinDesk)

Policy

China’s Zhejiang Province Implements Punitive Electricity Prices for Crypto Mining

The eastern Chinese province of Zhejiang said it is introducing punitive electricity prices for crypto miners, following in the footsteps of Hainan province and the Inner Mongolia region, even as authorities work to eliminate the industry outright, which was banned last year.

The NDRC’s Zhejiang branch and the local agency of the national grid operator jointly published a notice on February 14, saying that crypto miners would have to pay an additional 0.5 yuan ($0.079) per kilowatt hour (kWh). The notice also called on government entities and grid operators to strengthen their monitoring for crypto mining activity.
In December, the southern island province of Hainan introduced a 0.8 yuan per kWh surcharge for miners, CCTV reported. Meanwhile, Inner Mongolia added a 1.0 yuan per kWh fee starting in January.
An official from the Zhejiang Government Service Center told reporters on Tuesday that crypto mining is still prohibited. The official was responding to confusion among some Chinese internet users, who speculated the introduction of higher costs meant mining was allowed. The electricity premium is an auxiliary punishment to the ban, according to Zhejiang officials.
Two days ago, authorities in Shandong province called on citizens to report on suspected mining activity through hotlines.
Meanwhile, Dongguan customs in China’s southeast seized 49 second-hand Ant miners declared “shoe material” for export. This was at least the third seizure in February, according to local media. (CNBC)

China’s Supreme Court Adds Digital Currency to List of Illegal Fundraising Methods

The new policy change aims to mitigate risks arising from digital currency fundraising and the absorption of funds from the public.

China’s hardline policy on crypto took another turn on Thursday as the country’s Supreme Court revised its judicial interpretation for illegal fundraising to include digital currency transactions.
The Chinese Supreme Court issued a revised version of its “Decision on Amending the Interpretation of the Supreme People’s Court on Several Issues Concerning the Specific Application of Law in the Trial of Criminal Cases of Illegal Fund Raising.”
While maintaining four of the original characteristics of the law, it added crime, online lending, digital currency transactions, financial leasing and a few others to the revised list, local media reported.
The inclusion of cryptocurrency transactions in the new revised judicial interpretation would mean that those found illegally raising funds from the public in the name of digital currencies would be punishable under the newly revised law. The new law comes into effect on March 1, 2022. (Cointelegraph)
Meanwhile, the high court of China’s southeastern Guangdong province has ruled that cryptocurrency investment activities are not protected by law, further clarifying that crypto is not a legitimate currency in the mainland. (Forkast)

Industry

CasperLabs to Power Distributed Digital Certificates and Blockchain Applications in Fuzhou, China

CasperLabs, a leading blockchain software company for the enterprise market, and the Blockchain-based Service Network (BSN) have partnered to add the Casper Network-powered Fuzhou Chain to the BSN – Distributed Digital Certificate Network (DDC).

This addition will support the legal issuance of NFTs in Mainland China and will support the Fuzhou government entities and businesses with access to a reliable and innovative blockchain networks in a variety of industries, including supply chains, patents, and event management.
The Fuzhou Chain is one of 10 BSN OPBs, or Open Permissioned Blockchains, and will run as part of the BSN Distributed Digital Certificate infrastructure.
To differentiate ‘Chinese NFTs’ from those used in the rest of the world, NFTs on the Fuzhou Chain and other BSN OPBs are renamed as Distributed Digital Certificates (DDCs).
The full development and governance roadmap of the BSN-DDC Network and the integration of the Casper-powered Fuzhou Chain will be formally announced in March at the BSN-DDC Network’s official launch and press conference in Nanjing, China. (Yahoo Finan ce)

Rest of the Best

Roblox Stock Falls More Than 25% as Kids Return to Classroom

Shares of Roblox Corp (RBLX) fell more than 25% Wednesday after the company released earnings Tuesday that came in below Wall Street analysts’ expectations and added to investors’ concerns about its ability to grow users as the pandemic fades.

Roblox said fourth-quarter bookings and earnings before interest, taxes, depreciation and amortization increased from a year earlier. However, those figures fell short of what many analysts had forecast.
Chief Financial Officer Michael Guthrie said that the past nearly two years have been an anomaly with regard to user engagement due to the pandemic. “It’s just the daily activity is coming down because, again, people are back to school, back to work,” he said.
Shares of Roblox – which operates a free online platform for playing games, socializing and attending concerts virtually – fell 27% to close at $53.87 Wednesday, their lowest close since listing last year and their biggest ever one-day decline. However, the company is still priced above the $45 reference price from when it went public through a direct listing in March 2021.
Lately, Roblox has been attracting new users who are older than its traditional core demographic of children under 13 years old, firm executives said on the earnings call, adding that the company expects more international growth in the years ahead. (The Wall Street Journal)

That’s it for this week’s newsletter – thanks for reading! As always, I welcome any feedback on how to make this newsletter better. My email is yuke@pandaily.com. Hope you all had a good week, and see you again next week!