China NFT Weekly: Dating in the Metaverse

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: metaverse dating app Soul eyes Hong Kong IPO, ByteDance continues metaverse investments with the acquisition of VR startup PoliQ, Chinese tech giants vow to end NFT speculation, and more.

Metaverse Dating App Soul Eyes Hong Kong IPO

Tencent-backed social media and dating app Soul is vying for an IPO in Hong Kong, after abruptly withdrawing its plan to raise $185 million for a listing on the Nasdaq last year. The Financial Times first reported this story.

  • Soulgate Inc., the operator of social networking app Soul, filed an application for a public listing on the Hong Kong Stock Exchange (HKEx) on Thursday, with the Bank of America Merrill Lynch and CICC serving as co-sponsors.
  • Soul’s owner, Soulgate, filed paperwork in Hong Kong on Thursday revealing that the company had recorded a loss of 1.3 billion yuan ($194 million). The firm recorded revenue of 1.28 billion yuan ($190 million) in 2021, a surge of 157% year-on-year. Besides, gross profit margin reached 85%.
  • Soulgate is backed by tech giant Tencent, which bought a 49.9% stake in the company starting from 2020.
  • Founded in 2016 and built by a Shanghai team, the app markets itself as an “algorithm-driven online social playground” that matches like-minded users called through an elaborate personality and preferences test.
  • Soul makes money primarily from selling virtual items and membership subscriptions. A research report from last year shows that Soul users spent an average of around 40 minutes every day on the app. It also joined TikTok and QQ in making the cut for the top 100 entertainment apps worldwide by both downloads and revenue. (Financial Times)

READ MORE: Tencent-Backed Social Networking App Soul Pulls US IPO Plan

ByteDance Continues Metaverse Investments With Acquisition of VR Startup PoliQ

TikTok’s parent company, ByteDance, has acquired Chinese virtual reality (VR) startup PoliQ as part of its plan to expand its portfolio in metaverse hardware, content, software and platforms. SCMP first reported this story.

  • Beijing-headquartered ByteDance purchased PoliQ, operator of the once-popular virtual social platform Vyou, for “tens of millions of yuan” last week, according to Chinese corporate registry Tianyancha.
  • PoliQ will now become a part of Pico, a VR headset maker which was acquired by ByteDance in August of last year. PoliQ founder Ma Jiesi will now be working as the head of the social center department of Pico, according to SCMP, citing Ma’s profile on Maimai, a social networking website for Chinese professionals.
  • Pico was the third-largest virtual reality headset maker globally in the first quarter of 2021, with shipments growing 44.7% year-on-year, according to IDC.
  • ByteDance’s acquisition of Pico for nearly 5 billion yuan ($772 million) was the first major investment by a Chinese tech giant into the metaverse hardware sector.
  • The PoliQ acquisition comes as ByteDance has been expanding its portfolio in the metaverse industry. Tech giants around the world are also doubling down on the sector, with Meta pushing into VR fitness with a US $56.6 million acquisition of Within, the maker of VR workout app Supernatural. (SCMP)

READ MORE: ByteDance Acquired Metaverse Social Startup PoliQ

Debt-Laden Crypto Lender Babel Finance Looking to Hire Restructuring Specialist Houlihan Lokey

Babel Finance is hiring US investment banking firm Houlihan Lokey, a specialist in restructuring and distressed mergers and acquisitions, a few weeks after suspending withdrawals amid liquidity issues. CoinDesk and BlockWorks first reported this story.

  • The Hong Kong-based crypto lender froze withdrawals last month amid a cascade of defaults and liquidations related to over-leveraged firms including Three Arrows Capital and Celsius. Babel later said it had reached an agreement with counterparties on the repayment of some debts to ease short-term liquidity.
  • Babel Finance abruptly suspended withdrawals on June 17, citing “unusual liquidity pressures” – similar to competitors Celsius, Finblox and CoinFLEX. The company said in a statement last week that it was looking to fulfill its legal responsibilities to customers by continuing “to avoid further transmission and diffusion of liquidity risks.”
  • In May, the company raised $80 million at a valuation of $2 billion. Main investors in the round included Jeneration Capital and 10T Holdings, as well as existing shareholders Dragonfly Capital and BAI Capital, according to BlockWorks.
  • The news also came amid a slew of firings and voluntary resignations from Babel. Among those leaving in the near future are Yulong Liu, who served as head of partnerships at Babel for nearly three years, and communications director Jacynth Wang. (CoinDesk, Blockworks)

Chinese Tech Giants Vow to End NFT Speculation

Chinese tech giants including Tencent Holdings and Ant Group have signed an agreement to stop the secondary trading of NFTs and “self-regulate” their activities in the market. Reuters and TechCrunch first reported this story.

EU Agrees on New Regulation to Tame Crypto “Wild West”

The European Commission, EU lawmakers and member states secured an agreement on what is likely to be the first major regulatory framework for the cryptocurrency industry. Reuters, CNBC, and Cointelegraph first reported this story.

  • The landmark law, known as Markets in Crypto-Assets, or MiCA, is designed to impose tighter restrictions on a variety of players in the crypto market, including exchanges and issuers of stablecoins, tokens that are meant to be pegged to existing assets like the US Dollar.
  • Under the new law, stablecoins will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals.
  • MiCA will also develop standards for crypto companies to disclose information on their environmental and climate footprint.
  • Globally, crypto assets are largely unregulated. National operators in the EU are only required to monitor and control transactions relating to money laundering.
  • “Today, we put order in the Wild West of crypto assets and set clear rules for a harmonized market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger, the lawmaker who led negotiations on behalf of the European Parliament. (Reuters, CNBC, Cointelegraph)

Facebook Begins Testing New NFT Features

Meta has begun the roll out of an NFT feature on Facebook, just a week after its chief executive, Mark Zuckerberg, had announced the plan. TechCrunch and The Block first reported this story.

  • The feature will initially be open to a select group of US-based creators, similar to how the company rolled out NFTs on Instagram a month ago.
  • While Zuckerberg said the test will allow creators to cross-post on Instagram and Facebook, the sharing feature across both platforms has not yet rolled out.
  • In his Facebook post announcing the move, Zuckerberg also mentioned that the company is planning to get into augmented reality (AR) NFTs and 3D NFTs using the company’s Spark AR software platform.
  • Meta has said there won’t be any fees associated with posting or sharing a digital collectible, adding that it won’t offer the ability to turn digital collectible posts into ads, for now.
  • It is unclear when the new NFT feature will be made available to all Facebook users. (TechCrunch, The Block)

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 See you again next week!