The Supreme People's Procuratorate of China (SPP) has justified the need for standards to control transactions in the non-fungible token (NFT) market and warned of the potential dangers associated with this type of investment.
In instructions prepared for law enforcement agencies in the country, the SPP notes that the digital collection sector is just beginning to emerge and its management rules and regulatory system are not fully formed. Uncontrolled and indiscriminate expansion of this industry can lead to illegal fundraising, fraud and malicious marketing. Consequently, provincial law enforcement agencies should be aware of the many risks associated with the rapid release and distribution of digital collections.
Specialists at SPP stressed that NFT collections are part of unique digital certificates and should adhere to the principles of digital copyright preservation at all stages: purchase, sale and storage. The Office proposed to use the capacity of the Prosecutor's Office to crack down on criminal activities carried out under the guise of new technologies and formats generated by advances in this field. In addition, they recommended monitoring the activities of administrative bodies involved in the registration and supervision of advertising or financial transactions related to NFT.
SPP suggested that the authorities should stop the development of market inflation, as some digital collecting platforms have been seen to use dubious marketing strategies to generate enthusiasm and create the impression that the demand for the product is greater than the supply. Despite the lack of artistry, cultural symbolism and copyright infringement associated with these items, their prices are often too high without any reasonable value or pricing system to back them up.
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