<p>China’s gaming industry hit a significant speed bump on Friday as the General Administration of Press and Publication (GAPP) unveiled a draft proposing substantial changes to the regulation of in-game tokens, signaling a strategic shift in the country’s stance on digital currencies in gaming.</p><h2 id="header-0">Implementing more stringent controls</h2><p>The <a href="https://www.nppa.gov.cn/xxfb/tzgs/202312/t20231221_823187.html" rel="noopener noreferrer nofollow">proposed regulations</a> by GAPP bring about a ban on the conversion of game tokens into physical goods or legal tender. These guidelines, spanning 64 articles, impose stringent requirements on gaming companies. These include mandatory licensing in China, a two-year data retention policy, adherence to national and socialist values in content and the eradication of anonymous user registrations.</p><p>One significant aspect of the guidelines is Article 23, which specifically addresses the use of game tokens. It proposes restrictions on exchanging them for physical goods, services or legal tender.</p><p>The regulatory landscape becomes more complex due to the ambiguity surrounding cryptocurrencies, which are not recognized as legal tender in China. Although a warning was issued about the risks inherent in non-fungible tokens (NFTs), they <a href="https://medium.com/&#64;coinness.gl/chinese-prosecutors-issue-warning-on-nfts-d85e07e373b5" rel="noopener noreferrer nofollow">remain legal</a> in China. NFTs feature prominently within blockchain-based gaming.</p><p>Game providers are also confronted with new limitations on inducements, such as bonuses for registration or daily logins, and are mandated to implement measures against irrational consumer spending.</p><h2 id="header-1">Gaming sector fallout</h2><p>In the wake of these developments, several Chinese tech giants experienced a significant market <a href="https://edition.cnn.com/2023/12/22/business/chinese-tech-giants-shares-plunge-online-gaming-ban-intl-hnk/index.html" rel="noopener noreferrer nofollow">downturn</a> in Hong Kong. Tencent, a global gaming powerhouse and one of China’s most valuable companies, saw a 12.4% drop on Friday, marking its worst day since October 2008. This decline erased a massive 367 billion Hong Kong dollars ($47 billion) from Tencent’s market value.</p><p>NetEase, another gaming giant, witnessed a 25% dive in Hong Kong afternoon trade, recording its most substantial daily loss since its listing in June 2020. Additionally, Bilibili and Kuaishou, prominent players in video-sharing and short-video platforms, experienced declines of 9.7% and 7.2%, respectively, given their involvement in online gaming.</p><h2 id="header-2">Market uncertainty</h2><p>With this latest development, the future of gaming crypto tokens remains uncertain in China, with investor confidence having been hit hard. Putting the matter in context on Friday, Stansberry Research Analyst Brian Tycangco took to the X social media platform, <a href="https://x.com/BrianTycangco/status/1738073611234423247?s&#61;20" rel="noopener noreferrer nofollow">stating</a>:</p><p>”Govt regulation will effectively render prevailing business models irrelevant due to uncertainty regarding monetization. Games are inherently reward-based and if you clamp down on the use of rewards/incentives, you turn an entire industry on its head.”</p><p>The guidelines, open for public consultation until Jan. 22, 2024, have not yet been legally enacted. This time frame allows for feedback and potential adjustments before enforcement.</p><p>Notably, the Web3 gaming sector has witnessed substantial activity, with approximately a million unique active wallets engaged daily over the past three months, according to DappRadar. Industry experts, including Yat Siu of Animoca Brands, anticipate a potential surge in user engagement, emphasizing the potential impact of these regulations on the gaming industry’s trajectory.</p>

China’s GAPP proposes ban on gaming crypto token conversion

Table of Contents

CoinNess Global

Other articles published on Dec 23, 2023

Places Accepting Cryptocurrency To Buy Gifts This Christmas

TradFi’s Spot Bitcoin ETF Could Spell Doom for Bitcoin

New Trailer for Forgotten but Unbroken Unveiled

Binance Coin (BNB) Price Analysis for December 23

Leading Nigerian Banks Unite for Innovative cNGN Stablecoin Project

AI-Powered Piano Enables Disabled Musicians to Perform Beethoven’s Symphony No. 9

Join our free newsletter for daily crypto updates!