China NFT Weekly: Official Guidance on NFT Industry Development

Digestible news on the latest developments across the fields of Web3, NFTs, blockchain, and metaverse in China and beyond, compiled for you every week by Pandaily.

This week: US game developer Unity to spin off China unit to tap the country’s metaverse market, Chinese bitcoin mining rig maker Canaan mulls US expansion despite crypto winter, People’s Daily issues NFT research project to guide industry development, and more.

US Game Developer Unity to Spin Off China Unit; Investors Making Bets on Metaverse

US game developer Unity is in advanced talks to spin off its China unit in a bid to expand in the world’s largest games market. Reuters first reported this story.

  • The San Francisco-based company is seeking strategic investors for a business valued at over $1 billion, according to sources. Unity’s stocks went up by over 5% upon the news on Tuesday.
  • The report comes as strained China-US relations prompt global tech firms to reevaluate their positions with regard to operations in China. In the meantime, metaverse and web3 technologies are increasingly drawing the attention of game developers and investors.
  • Unity entered the Chinese market in 2012 and powers many of the country’s best-known games, including “Honor of Kings” and “Genshin Impact.”
  • The company also hopes that the spin-off will lead to more extensive application of the software in China in areas such as smart city modeling and the metaverse. Investors are also said to be making big bets on the metaverse, according to the sources.
  • Unity believes the spin-off will help with its China expansion and give the unit more autonomy and control over how it operates in the country. (Reuters)

Chinese Bitcoin Mining Rig Maker Canaan to Expand Despite Crypto Winter

China-based Canaan Inc., one of the world’s largest crypto mining rig makers, is pushing ahead with a global expansion despite a crypto market cool-down. Forkast first reported the story.

  • In November 2020, it became the first crypto company to be listed on the Nasdaq, at a valuation of $1.35 billion.
  • The company will focus its expansion plan on the US this year, and will start its own crypto mining in the country, either with a partner or on its own, according to the company’s CEO Edward Lu.
  • Since China issued a blanket ban on crypto mining last September, the US has seen an influx of Chinese miners, with Texas being one of the most popular destinations.
  • Canaan reported a 236.7% revenue growth to 1.36 billion yuan ($213.9 million) despite logistics issues and supply chain disruptions during the pandemic. Net income expanded from 1.2 million yuan to 441.6 million yuan ($69.7 million).
  • “The US market is very friendly in terms of policy towards the crypto mining business, so this is a key consideration for why we chose the US market,” the CEO said.
  • “The infrastructure in the US is very good and the electrical grid offers a mix of green energy, which is important for the environment [aspect] of mining. We must go green if we want to be recognized by mainstream industries,” he added. (Forcast)

READ MORE: See our previous articles on Canaan!

Tai Group Acquires Social Media Product Huobi Chat

Tai Group, a Hong Kong-based investment holding group that invests in blockchain, metaverse, and related technologies, announced last week that it has completed the acquisition of Huobi Chat, a social media product under leading crypto exchange and financial services provider Huobi Group. Pandaily first reported the story.

  • With this acquisition, Tai Group hopes to turn Huobi Chat into one of the world’s first NFT social platforms and promote the development of China’s metaverse infrastructure.
  • In addition to investing in metaverse and blockchain, Tai Group also runs a digital collectibles platform to help promote the digitization and circulation of brands and local IPs. The company has reportedly partnered with the culture and tourism bureaus in Beijing, Chongqing, Xi’an, and Hunan, as well as brands such as JD.com.Gree Electric, and HTC.
  • Launched in 2018, Huobi Chat is an instant messaging app for blockchain and cryptocurrency communities. Each year, Huobi Chat invests hundreds of millions of yuan in R&D.
  • As of July 2022, the platform had drawn over seven million users, making it one of the best known and most popular instant messaging apps among blockchain enthusiasts.
  • China’s market for digital collectibles is expected to exceed 70 billion yuan ($10.35 billion) in 2026, according to local news reports. As of August 2022, the sector saw over 1,000 newly registered digital collectibles companies. (Pandaly)

RELATED: Read all of our previous articles on Huobi!

People’s Daily Issues NFT Research Project to Guide Industry Development

People’s Daily, a state-run newspaper and mouthpiece for the Chinese Communist Party, has launched an NFT research project to “guide the orderly development of digital art” as rules around the industry remain unclear. SCMP first reported the story.

  • People’s Lingjing Research Institute was launched as a joint venture between the paper’s corporate entity and Sinofaith, a Shanghai-based IP rights company. The academy will focus its research on legal issues, technical standards, and regulatory models for “the process of digitizing artworks,” according to People’s Daily.
  • People’s Daily opened the research institute in January as a means to promote its own digital collectibles, China’s answer to restrictions around building digital assets on decentralized blockchains. Unlike standard NFTs, which are built on public blockchains and backed by crypto, digital collectibles are built on centrally-controlled blockchains and backed by fiat.
  • The academy’s research projects and publications will need to go through China’s digital publishing system and censorship mechanisms, according to SCMP.
  • Lingjing will focus on exploring “content regulation model” for issuing digital artwork, and guide the market’s “orderly development,” according to People’s Daily. In addition, it will explore issuing digital collectibles overseas as a means to promote Chinese culture. (SCMP)

Schwab Launches Crypto ETF on NYSE

Last week, multinational financial services company Charles Schwab launched its first crypto-themed ETF on the New York Stock Exchange (NYSE). CoinDesk and Investopedia first reported the story.

  • The ETF will trade under the ticker symbol STCE and will track Schwab’s Crypto Thematic Index, which is “designed to deliver global exposure to companies that may benefit from the development or utilization of cryptocurrencies (including bitcoin) and other digital assets, and the business activities connected to blockchain and other distributed ledger technology,” according to the company’s website.
  • In other words, the ETF does not directly invest in crypto, but offers exposure to the crypto ecosystem via companies that make crypto a part of their business activities.
  • The fund will also track companies that may benefit from validating consensus mechanisms and crypto mining as well as digital-asset trading and brokerage services, according to the company’s official press release.
  • It will charge an annual operating expense of 0.30%, which Charles Schwab says is the lowest.
  • The decision to launch the crypto ETF is a drastic change for Charles Schwab, whose CEO Walt Bettinger has more than once stated his concerns about virtual assets. However, in January 2022, the CEO said that cryptocurrencies were “hard to ignore.”
  • Schwab joins BlackRock (BLK) and Fidelity as financial institutions that have launched crypto-related exchange-traded products this year. (CoinDesk, Investopedia)

Coinbase Shares Soar 10% in Boost From Meme Traders

Shares in beaten-down crypto exchange Coinbase Global rose 10% Thursday after the company announced a partnership with BlackRock that will allow its institutional clients to buy bitcoin. CNBC and Barron’s first reported the story.

  • The unusual jump in Coinbase could be the result of a “short squeeze,” which occurs when a stock moves higher, prompting traders who bet its price would fall to buy it in order to avoid greater losses.
  • Coinbase opened at $60.96 a share on Monday and traded above $116 at points early Thursday – a staggering rally of 90%.
  • Coinbase will offer its prime services to institutional clients of BlackRock’s portfolio management platform, Aladin, the company said on its blog. Coinbase will provide crypto trading, custody, prime brokerage and reporting capabilities.
  • “Our institutional clients are increasingly interested in gaining exposure to digital asset markets and are focused on how to efficiently manage the operational lifecycle of these assets,” Joseph Chalom, global head of strategic ecosystem partnerships at BlackRock, said in a statement. The partnership will let them “manage their bitcoin exposures directly in their existing portfolio management and trading workflows.” (CNBC, Barron’s)

That’s it for this week’s newsletter – thanks for reading! As always, we welcome any feedback on how to make this newsletter better. Write to us at [email protected]. See you again next week!

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