The 14th Five-Year Plan for the Digital Economy in Shanghai -- the “arrow” to liberalize NFT transactions?

来Source | Shao SaLawyerauthorship| Xiao Sa layout | Wang Jilongyan

Released in Shanghai on July 13“The 14th Five-Year Plan for the Development of the Digital Economy in Shanghai” (Shanghai Digital Plan for short)In the digital trade section, it is stated that “supporting leading enterprises to explore the construction of an NFT trading platform, research and promote the digitalization of NFTs and other assets, the global circulation of digital IP, and digital rights protection” will be tested first in Shanghai. As soon as the news came out, it sparked a buzz. Insiders in the digital collection industry were divided into two groups:One faction is happy, good, and ready to do a big job; the other faction is careful to wait and see, and may be taken away by the investigation after a few years.

So, how should we rationally view local government plans? Let's also listen to Sister Sa's breakdown.

1. The target of the Shanghai Digital Plan is not commercial entities, but various government departments

The Shanghai Digital Plan is based on the “14th Five-Year Plan” Digital Economic Development Plan (National Digital Plan for short) issued by the State Council [2021] No. 29.The plan issued by the State Council is for “all provinces, autonomous regions, municipalities directly under the Central Government, ministries, departments, and agencies directly under the Central Government”, that is, “male to male”.Similarly, let's take a look at the Shanghai Digital Plan. The copy unit is “various departments of the Municipal Committee, the General Office of the Standing Committee of the Municipal People's Congress, the General Office of the CPPCC, the Municipal Commission for Discipline Inspection and Supervision Commission, the Municipal High Court, and the Municipal Procuratorate”. It is also a “public to public” document. It is not directly giving instructions to the market, orAll lower-level authorities need to further refine incentives in order to accurately locate “specific market players.”

Looking at the national digital plan, the focus is on optimizing and upgrading digital infrastructure, giving full play to the role of data elements,Vigorously promote the digital transformation of the industry and accelerate digital industrialization, continue to improve the level of digitalization of public services, improve and perfect the digital economy governance system, focus on strengthening the digital economy security system, and effectively expand international cooperation in the digital economy. Among them, the sixth section of the full article explains “Accelerating the Promotion of Digital Industrialization” and talks about “Accelerating the Cultivation of New Business Formats and Models”, and provides more detailed content: the Digital Economy New Business Format Cultivation Project: (1) Continuing to expand emerging online services; (2) Deepening the development of the sharing economy; (3) encouraging the development of a smart economy; and (4) guiding the new individual economy in an orderly manner. The fourth point talks about “building a prosperous and orderly industrial innovation ecosystem”. Among them, the most relevant to NFTs are:Encourage the development of emerging writing platforms such as open source communities and developer platforms, cultivate a digital industry innovation ecosystem where large, medium, and social developers can write openly, and drive innovative enterprises to grow rapidly.

In view of this, NFT-related content is limited, and we can derive from the above:There is no encouragement or encouragement for NFTs in the upper planning.Municipal planning can only refine higher-level plans. In terms of extension, non-homogenized tokens can be interpreted as an innovative ecosystem for the digital industry.But a plan is a plan, and a legal boundary is a legal boundary.

We acknowledge that the law has“Time lag”Due to the requirement of legal stability (giving expectations of market stability), many laws lag behind emerging things. However,The law will also provide relief. After approval by the National People's Congress or the Standing Committee, some laws can be suspended in certain regions or fields.Well, whether the plans of the municipalities directly under the Central Government have been approved by the National People's Congress or the Standing Committee of the National People's Congress, it is currently shown that no matter how the local government plans, they must be explored and tested under the existing legal framework. Based on this, we can conclude thatThe Shanghai Data Plan did not give the green light to second-level NFT transactions and exchanges, nor did it “approve” the digital sale of assets such as real estate on the chain.

2. Digital NFT can be included in the “cultural digitalization” framework and is worthy of support

“Cultural digitalization” is a national strategy. Our country has a rich cultural heritage and rich IP resources, which should be explored in depth.In recent years, digital collections have risen to prominence, passing on the national style to a new generation, and loved by people all over the world.

Sister Sa supports the export of China's outstanding culture to the digital world. Currently, the NFT method is used to fix property rights in copyright, and the compliance path is expected to be smooth.Breaking away from the cultural industry, simply speaking of NFTs as non-homogenized tokens, frankly speaking, their significance is limited.Technology serves the real economy, and the cultural industry is also part of the real economy. Science and technology serving the cultural industry is the meaning of today's society.

At the moment,The digital NFT industry is mixed, and there is a trend of “bad money driving out good money”A bold and ambitious enterprise has opened a secondary market and is linked to foreign public chains and transactions. It advertises to domestic users that buying an NFT means buying a financial product that can add value. As prices rise and fall in the secondary market, it forms a K line and cuts chives. What's more, they set eyes on sensitive consumer communities, deliberately release news from the author of an NFT's original author, guide the price of second-hand NFTs by controlling the timing of the release of the news, and ask them to “manipulate securities prices” in the capital market. Larger manufacturers that are relatively conservative generally adopt the practice of selling in the primary market. Transfers require a long interval, thereby reducing financial attributes and avoiding irrational consumer hype.This practice has been laughed at by outsiders as a “castrated version,” but this practice actually has minimal legal risk.

Among the NFT trading platforms that set up a secondary market, the compliance value of the consignment model is high, and Sister Sa will not go into detail here.In any case, we all want Chinese culture to take advantage of digitalization, and NFTs should not be abandoned as a powerful tool for cultural digitalization.We acknowledge and admire the Shanghai Digital Plan. More regions are afraid to try new things and fail to encourage the development of new things until they miss out on historical opportunities, which is stifling

3. Regulatory sandbox to provide encouragement but not excessive

Anticipate the next implementation of Shanghai's digital plan,The first is the parkVarious types of parks have a tendency to accept companies when entering, and come with their own preferential policies. If NFTs take root locally, a large number of NFT trading platforms will settle in major parks in Shanghai;The second is industry development and self-disciplineWhether the emerging business format can be returned to the existing internet finance or fintech circuit is unknown, but the NFT trading platform will definitely fall under a certain industry organization and be “soft supervised” by a self-regulatory organization;Three is the regionIt opens up special regions to engage in different industry segments. This is also a method of planning and implementation. Zhang Jiang has the advantages of Zhang Jiang, and Jiading has the characteristics of Jiading.

If you guessed right, the next step is large-scale technology and application training and entrepreneurship incubationSister Sa is likely to be called up as a lecturer. Wait and see.

Based on the analysis in the first part,We suggest choosing a certain region or park to provide a local regulatory sandbox, that is, to allow some powerful and creative enterprises to try first and search up and down.All of a sudden, when the store opens up, society is prone to irrational hype and rights protection. Only by setting a certain threshold within a fixed area can qualified players be screened out. As for the regulatory sandbox sandbox, academic papers and analytical articles are already out of the street, so Sister Sa will not discuss it.All in all, when risks are manageable, don't suppress the small spark of innovation and entrepreneurship. Opening up a regulatory sandbox for the NFT industry is worth it.

4. Strictly abide by the bottom line and never raise funds illegally

In the Shanghai Digital Plan, the focus on developing business models such as NFTs is to promote cultural digitalization and enhance the country's cultural soft power. Therefore, it will not change the bottom line, that is, NFTs should use their attributes as cultural products, adhere to integrity and innovation, and empower the real economy. At the same time,Resolutely prevent the trend of financialization and securitization of NFTs. In the general direction of preventing financialization and securitization tendencies, illegal fund-raising is a “red line border” where we must tighten our nerves.

Looking at the current situation, there are roughly two risk points of illegal fund-raising in the NFT industry:

First, the digital collection platform weakens the non-homogenized characteristics of NFTs by dividing ownership or creating in batches, etc., which in turn falls within the scope of the crime of illegally absorbing public deposits.Article 2 (8) of the newly revised “Supreme People's Court's Interpretation on Certain Issues Concerning the Specific Application of the Law in Trial of Criminal Cases of Illegal Fund-raising” (hereinafter referred to as the “Interpretation of Illegal Fund-raising”), which came into effect on March 1 of this year, clearly states that those who illegally absorb funds by means of virtual currency transactions or the like meet the requirements stipulated in Article 1 (1) of this interpretation shall be convicted and punished for the crime of illegally absorbing public deposits.

Second, the Shuzang platform launched repurchase methods such as repurchasing NFTs at a higher price, which in turn fell within the scope of the crime of illegally absorbing public deposits.Article 2 (4) of the Explanation of Illegal Fund-raising clearly states that those that do not have the true content of selling products or providing services, or that do not have the main purpose of selling goods or providing services, and that meet the conditions stipulated in Article 1 (1) of this interpretation shall be convicted and punished for the crime of illegally absorbing public deposits.

5. NFTs, beware of financialization and becoming a channel for money laundering

According to our observations, some NFTs are appreciating at an astonishing rate, and even 100x NFTs have appeared.High unit prices may be targeted by criminals and become a tool for money laundering. Overseas, prostitutes are already using NFTs as money for illegal transactions.The “two sides of the same coin” of de-financialization and anti-money laundering are due to the financial nature of NFTs that they can be an “ideal tool” for money laundering. As mentioned earlier, the Shanghai Digital Plan will not deviate from the general direction of the country's current regulation. If the digital collectibles industry wants to take advantage of this trend, it is necessary to cut value and get rid of the financial nature of NFTs as much as possible.

Shanghai has been concerned about physical hype for a long time. The Shanghai branch of the People's Bank of China once published “Be wary of the “frying shoes” boom and prevent financial risks.Even a pair of sneakers may transform from an ordinary commodity to a financial product, showing a trend of securitization, as is the case with an NFT digital collection.In the event of a boom in hype, local financial regulators may directly issue a warning on the prevention of NFTs to alert participants.

So, how can NFTs be de-financialized? We think there are at least a few things to keep in mind:

First, NFTs must be completely decoupled from financial assets.Currently, the most popular way to play is to bind an NFT to a physical product, such as buying an NFT as a bonus physical doll, a hand-drawn work, etc. These bound physical products are often called “underlying products” of NFTs. It is important to note that these underlying products must be decoupled from financial assets, and must not include securities, insurance, credit, precious metals, or any other product (such as real estate) of the same nature as the above mentioned products (such as real estate).

Second, it is essential to treat the secondary market carefully.The “price discovery” effect of the secondary market often stimulates the value attributes of the financialization of NFTs, which is not the same as the general direction of national regulation.

Third, attention should be paid to adding anti-money laundering obligations.Digital platforms must conduct NFT transactions in fiat currency, and strict real-name verification is required. Here, we also strongly urge domestic digital platforms to procure anti-money laundering services as much as possible, and refer to implementing the strictest anti-money laundering system in the financial industry to reduce their own criminal risks.

Write at the end

NFTs are not monsters, nor innocent young girls. They look at this new thing from a complicated perspective, and they don't do “one-size-fits-all” or “one-size-fits-all” or “one-size-fits-all.”Objectively speaking, human development to the present day does require a digital world. Perhaps the future world will be a digital ocean.

We must not miss the wave of economic digitalization, especially the climax of cultural digitalization, seize historical opportunities, and calmly face the collision of technology and humanity. NFT is a technological complex that can empower the real economy.As long as we can draw boundaries and actively guide them scientifically, it will bring a splendid cultural light to our lives.