China NFT Weekly: Keeping the Metaverse Open

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

This week: Tencent’s gaming phone brand acquisition falls through as Beijing ramps up metaverse scrutiny, Animoca Brands to make foray into education, crypto sell-off trending on Chinese social media despite crypto ban, and more.

Shanghai Court Affirms That Bitcoin Is Subject to Property Rights

A district court in Shanghai ruled on a Bitcoin owner’s right to compensation in a case involving an unpaid loan, reported Cointelegraph.

  • The Shanghai High People’s Court has issued a document stating that Bitcoin is subject to property rights, laws, and regulations. The finding was made in relation to a lawsuit filed in a district court in 2020 involving the recovery of a loan of one Bitcoin.
  • The lower court recognized Bitcoin as having value, scarcity, and disposability, and therefore meeting the definition of virtual property and being subject to property rights.
  • The Shanghai Baoshan District People’s Court ruled in favor of the plaintiff, and ordered the defendant, who no longer had the Bitcoin, to provide compensation at a discount of the Bitcoin’s value at the time of the loan.
  • The case was complicated by several factors, including the difficulty in determining the current price of the loaned Bitcoin, since crypto trading is banned in China. Moreover, the court’s investigation was stunted by its lack of authority to make inquiries about virtual property. (Cointelegraph)

Crypto Sell-Off Trending on Chinese Social Media Despite Crypto Ban

Luna, a cryptocurrency that saw its prices plunge over 80% on Tuesday, became a top trending search on Chinese social media platform Weibo, reported SCMP.

  • Bitcoin, which dropped to half of its value this week from its peak in November, was also one of the most searched terms on Weibo as of Tuesday.
  • The searches suggest that a community of quiet crypto enthusiasts still exists, despite the country’s ban on crypto trading and mining in Sepetember.
  • The prices of a range of popular cryptocurrencies dropped as investors sold off riskier assets in response to the United States Federal Reserve’s move to raise interest rates and keep inflation under control.
  • Bored Ape Yacht Club (BAYC), one of the world’s most popular NFTs, saw its average sales price decrease by 29% in the past seven days in US dollar terms, while transactions and user numbers dropped by 21% and 27%, respectively.
  • While state media and regulatory authorities have repeatedly warned the public about the speculative risks of crypto assets, crypto communities have found ways to work around the restrictions. Data from SimilarWeb suggests that close to 10% of desktop web traffic on OKX – one of the world’s largest crypto exchanges – comes from China. (SCMP)

Tencent’s Gaming Phone Brand Acquisition Falls Through as Beijing Ramps Up Metaverse Regulatory Scrutiny

Chinese technology and entertainment conglomerate Tencent has decided to walk away from a deal to acquire Xiaomi-backed gaming phone brand Black Shark, reported SCMP.

  • Tencent has been in talks with the niche maker of gaming phones and accessories since January to further its ambitions in the metaverse. The Xiaomi-backed acquisition target would pivot to make virtual reality headsets after the deal, according to an earlier report by Bloomberg.
  • The acquisition would have marked Tencent’s first investment in a metaverse/VR hardware maker. However, the plan fell through as the Shenzhen-based company failed to obtain approval from government authorities.
  • Developing specialized hardware is one of the key pillars to realizing the metaverse. Meta was one of the earliest movers, buying VR headset maker Oculus in 2014, while top Chinese rival ByteDance last year purchased Pico, a domestic VR headset maker.
  • The failed acquisition comes as Chinese tech giants hit regulatory red flags with their metaverse ventures, while numerous trademark applications containing the world metaverse (or “yuan yuzhou” in Chinese) have been rejected by the National Intellectual Property Administration. Both suggest that Beijing is ramping up its scrutiny over the metaverse industry. (SCMP, Bloomberg)

READ MORE: Pandaily’s take on the failed acquisition

Animoca Brands to Make Foray Into Education

Hong Kong-based gaming software and venture capital firm Animoca Brands is looking to make its foray into the education sector, according to reports by TechCrunch and Tech in Asia.

  • “Animoca Brands plans to enter the education sector to bring students and teachers #LearnToEarn or #TeachToEarn rewards,” the company tweeted on Saturday.
  • While the company is continuing its growth and focus on blockchain gaming, it is also looking to expand into new segments and markets like education in order to drive mass blockchain adoption, according to firm CEO Yat Siu.
  • Animoca Brands will not limit itself to education about crypto topics, but rather will provide education tools that can be applied across various disciplines.
  • “The reason we’re so focused on [education] is because we think of NFTs about creator economies, and what’s one of the largest creator economies in the world? Teachers,” Siu said.
  • The company is also mulling an acquisition later this month, according to Tech in Asia.
  • Founded in 2014 by entrepreneur and angel investor Yat Siu, Animoca Brands is a prolific software and VC company that has invested in over 220 portfolios across blockchain gaming, NFTs, decentralized finance and the metaverse, among other sectors.
  • As of January this year, the company had raised $360 million, valuing it as $5.4 billion. (TechCrunch, Tech in Asia)

READ MORE: Animoca Brands’ Empire of NFT Games

Instagram Will Test NFTs With Select Artists

Meta CEO Mark Zuckerberg confirmed in a Facebook post last week that the company is testing NFTs on Instagram, according to TechCrunch and TheVerge.

  • The CEO said the new function will allow collectors and creators of digital collectibles to display NFTs on their profile, and that similar functionality will come to Facebook soon, “along with augmented reality NFTs on Instagram Stories via Spark AR, an augmented reality platform that allows users to create AR effects for mobile cameras, similar to Photoshop or Sketch.
  • Instagram head Adam Mosseri tweeted a video saying that a small group of users in the US will be allowed to display NFTs on their feeds, stories, and in messages. No fees will be charged for posting or sharing a digital collectible on Instagram for now.
  • Mosseri said the company wants to keep the test small, perhaps in an attempt to cope with the public’s distrust of a major social networking platform undermining the decentralized ethos of Web 3. “I want to acknowledge upfront that NFTs and blockchain technologies and Web3 more broadly are all about distributing trust, distributing power,” Mosseri said. “But Instagram is fundamentally a centralized platform, so there’s a tension there.”
  • Instagram’s NFT test comes as Twitter enabled NFT profile pictures for premium users earlier this year. YouTube CEO Susan Wojcicki suggested that the platform may also embrace Web 3 technologies including NFTs to support its community of creators.
  • Facebook bought Instagram in 2012 for $1 billion – a shocking sum at the time for a company with 13 employees. Instagram today has roughly 1 billion monthly active users, and has exceeded half of parent company Meta’s $50 billion in 2021 ad revenue. (TechCrunch, The Verge)

Bored Ape Yacht Club Cashing In on Metaverse Virtual Land Sale

Miami-based Yuga Labs, the startup behind the world’s most popular NFT collection – Bored Ape Yacht Club – is creating a metaverse within which it sells plots of virtual land, according to the Financial Times.

  • Yuga Labs is working in partnership with London-based start-up Impropable to develop plots of virtual land called “Otherside” for its upcoming metaverse.
  • Users will be allowed to move their assets between different virtual worlds, Improbable chief executive Herman Narula told the Financial Times.
  • “We have seen how walled-gardens and closed networks exploit the people that spend time on the services for the benefit of the few,” according to Yuga Labs chief executive Nicole Muniz.
  • The company claims that its vision is to create an “open” alternative to the virtual worlds built by big tech companies such as Apple and Meta. However, “Otherside” recently sold for a total of $300 million, pricing out all but the wealthiest buyers.
  • Yuga Labs is one of the most valuable Web3 startups, with a valuation of up to $5 billion in a recent funding round by venture capital group Andreesen Horowitz. (Financial Times)

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 See you again next week!