Last week, China launched the China Digital Asset Trading Platform, the nation’s first state-approved digital asset marketplace that supports the resale of digital collectibles, the mainland China version of NFTs. The development is notable not only because it suggests that China is moving closer to allowing the global-style resale of NFTs, but also because it asserts the state’s role in any potential secondary trading system that might emerge.
2022 witnessed the retreat of China’s private sector in the digital collectible space. Internet giants pledged to refrain from providing digital collectible trading services and Tencent shuttered its digital collectibles platforms. Now, with the arrival of the trading platform that is supported by state-affiliated organizations, China makes it abundantly clear that the nascent digital collectibles trading market will be centralized.
Coincidentally, and ironically for a supposedly decentralized sphere, the global NFT market is also pivoting towards centralization. Part of the reason is that the “crypto winter” unleashed by the sudden implosion of FTX is calling for more credibility to be introduced into the market. The “crypto bro” culture, represented by overhyped drops and questionable credibility, no longer attracts investors. Instead, renowned cultural institutions will take the lead in unveiling new NFT drops and even creating purpose-built blockchains to restore trust.
However, the trend was evident even before the FTX meltdown. Some observers describe it as the NFT market’s “growing resemblance to the rest of the art market,” in which celebrities and top auction houses garner the most attention and dominate the high-end sector.
Galleries and institutions have also become indispensable for NFT creators to sell their artworks. This is drastically different from the original environment of the NFT market, where independent artists benefited the most through exchanging artworks among themselves and becoming financially sustainable through each sale.
Perhaps the return of NFTs to centralization is inevitable. Sitting at the crossroads between the art and tech sectors, NFTs are bound to receive the close attention of investors from both, whether the earliest NFT creators welcomed them or not.
However, significant differences still remain between the Chinese and global markets even during this centralization trend: the government will be the sole adjudicator of the former while multiple major art institutions will compete in the latter. It will be interesting to see the metaverse initiatives that Chinese and western museums and art institutions will respectively adopt in 2023.