China's Metaverse: Regulating Cryptocurrencies, NFTs and Data Privacy

August 26, 2022 | BY

Susan Mok

Zhenyu Ruan, Yangdi Zhao of Baker McKenzie FenXun (FTZ) Joint Operation highlight notable legal developments in the three main legal areas of the virtual world called the metaverse, namely cryptocurrency regulation, NFT copyright infringement and data privacy

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Summary

  • It is virtually impossible to use Bitcoin or other cryptocurrencies in the metaverse in China given the stringent regulations in place and whether e-CNY, a digitalized version of China's legal currency issued by PBOC, will be a substitute for cryptocurrencies remains to be seen. 
  • China's first copyright infringement case relating to NFT digital works has shed some light on how current Chinese copyrights law will apply such as the legal nature of NFT digital works and an NFT platform's intermediary liability. 
  • An additional major challenge posed to entities operating the metaverse is compliance with China's data protection laws and the statutory data localization and cross border data transfer requirements in China and other jurisdictions.