January 21, 2022

Chinese State Media Flags the Risks of Metaverse Land Sales

The newspaper that serves as the mouthpiece for the Chinese Communist Party issued a fresh warning pertaining to the metaverse. This time, the target were speculators who are participating in sales of virtual property, which, the newspaper said was the ‘getting burnt’. On Thursday, a commentary was published by the People’s Daily in which it said that property sales in the metaverse was just like ‘product financialization’ and added that there were risks of money laundering, fraud, volatility and illegal fundraising associated with it. The concept of the metaverse is an immersive life-like virtual world, where people can work, meet and play and it is regarded as the next iteration of the internet by many.

Purchases and transactions related to virtual items in the metaverse are usually conducted in the form of cryptocurrency, which is backed by digital assets as well as non-fungible tokens (NFTs). According to the newspaper article, China has not given any clarity regarding the regulations that would be applicable to NFTs and that laws in China, as well as other countries, do not support any transactions that involve the use of digital assets. The article said that regulation should be prioritized over innovation. It added that there are always new risks involved with novel things, therefore, there should be order and boundaries in the development of novelties and tolerance rather than indulgence is needed.

It also added that metaverse was still in its early stages of development, due to which people should wait for it to develop more, so they don’t get ‘burnt’. Recently, there has been a lot of hype surrounding land sales in the metaverse. Tokens.com, a Canadian crypto company, announced in the previous month that they had bought land worth US$ 2.4 million on Decentraland, a virtual reality platform. A week later, a record US$ 4.3 million was spent by Republic Realm, based in New York, on the acquisition of digital land via The Sandbox, which is another metaverse platform.

Immyshow Digital is an influencer company based in China, which has developed a metaverse platform by the name of Honnverse. It has also introduced beta testing for sales of virtual property. The company has used lottery tickets for giving away virtual houses, as well as a reservation system. The real estate has even been listed by some of the winners on eCommerce platforms and the asking prices have gone as high as tens of thousands of yuans.

It should be noted that this is not the first warning issued about the metaverse and NFTs by the state media, as these two have become buzzwords for investors and companies. The People’s Daily had issued a warning last month against a market frenzy and said that people still needed to stay rational in order to understand the current mania regarding the metaverse. The metaverse concept has also been popular amongst China’s Big Tech companies, which include names like Alibaba Group Holding, Baidu, and Tencent Holdings and they have already sent applications for registering trademarks, along with NFTs.

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