What proposals and voices regarding virtual assets, the metaverse, and digital collectibles were presented at this year's Two Sessions?

Organizer: Grapefruit, ChainCatcher

During the 2023 National Two Sessions, representatives and committee members continued to focus on virtual assets and the metaverse-related industries. Among these, the regulation and legislation concerning virtual assets and digital collectibles became the focal points of attention for the representatives.

However, compared to the dozens of proposals and the enthusiasm surrounding blockchain and the metaverse in 2022, this year, the voices from the representatives have been relatively fewer.

According to public information, there are about 7 related proposals today, of which 3 are about the regulation and legislation of virtual assets, 2 are about the standardization of the metaverse industry and technology, and 2 are about the regulation of digital collectibles and their integration with physical scenarios.

Related Reading: “The Two Sessions Officially Conclude, Quick Overview of Proposals Related to Blockchain, the Metaverse, and Digital RMB from 20 Representatives and Committee Members”

Digital RMB, Virtual Asset Regulation and Law

National People's Congress Representative Fu Xiguo: In the field of preventing financial risks, it is necessary to guard against virtual currency risks and clarify the legal responsibilities for the creation and sale of digital tokens.

National People's Congress representative and President of the Shenyang Branch of the People's Bank of China, Fu Xiguo, plans to submit a proposal to amend the "People's Bank of China Law" during the 2023 Two Sessions. He stated that in recent years, significant changes have occurred in the domestic and international economic and financial landscape, and financial system reforms have deepened. The functions of the People's Bank of China have also been adjusted accordingly by the Central Committee and the State Council. The current legal provisions can no longer meet the objective needs of economic development and the responsibilities of the People's Bank, making amendments necessary.

Fu Xiguo suggested that, first, the legal status of the People's Bank as a macro-prudential manager should be established; second, the regulatory function system should be improved, and the legal basis for fulfilling responsibilities should be strengthened; third, the form of digital RMB should be specified, and the legal basis for issuance should be clarified; fourth, the regulation of financial illegal activities should be strengthened, and relevant legal responsibilities should be improved.

He believes that the management responsibilities for the RMB should be refined, and the legal definitions regarding the form and production methods of legal RMB should be redefined, granting digital RMB the same legal status as physical RMB. Based on the characteristics of digital RMB, comprehensive and detailed regulations should be established regarding its issuance, circulation, and regulation.

In the area of preventing financial risks, he also suggested guarding against virtual currency risks and clarifying the legal responsibilities for the creation and sale of digital tokens.

National Committee Member Wu Yiqiang: Leverage the technological advantages of digital RMB smart contracts in stimulating consumption, education services, tax exemptions, and foreign payments.

National Committee member and President of the Tianjin Branch of China Construction Bank, Wu Yiqiang, suggested that in 2023, the technological advantages of digital RMB smart contracts could be utilized in the precise distribution of consumption vouchers, regulatory oversight of pre-paid fees in the education service industry, sales of duty-free goods, foreign payment experiences, and applications in cruise home ports, significantly promoting consumption upgrades and enhancing convenience in travel, business, and tax-free sectors.

National Committee Member Pi Jianlong: Accelerate specialized legislation for the protection of online virtual property.

The 14th National Committee member and Director of the Jintai Law Firm in Beijing, Pi Jianlong, plans to submit a proposal to the Two Sessions regarding the acceleration of specialized legislation for the protection of online virtual property. This proposal argues that the conditions for specialized legislation on the protection of online virtual property are now basically mature, and it is recommended that the National People's Congress quickly include the "Online Virtual Property Protection Law" in the legislative plan and initiate the relevant legislative process.

He explained that online virtual property is currently in a legal regulatory vacuum and requires prompt legislation to establish an appropriate legal framework, clarifying the legal attributes, status, and relief mechanisms for online virtual property, ensuring the safe and stable development of related industries.

Many countries and the European Union attach great importance to the development of virtual property and have formulated relevant regulations. The digitization of assets is an inevitable choice for developing a new type of digital economy. The third generation of the internet considers data and virtual property as important supports, believing that the next generation of the internet will be a value network, with technologies such as blockchain, smart contracts, oracles, the metaverse, and artificial intelligence being crucial for asset digitization.

Accelerating specialized legislation for the protection of online virtual property is necessary to enhance national competitiveness, protect the rights and interests of the public, and strengthen regulation. China's virtual property needs to develop its own technology and formulate regulations that align with China's national conditions to enhance its international competitiveness in the next generation of the internet and the new digital economy.

National People's Congress Representative Feng Fan: Specialized legislation for data and online virtual property should be initiated as soon as possible.

National People's Congress representative and Director of Guohao Lawyers (Nanchang) Firm, Feng Fan, stated that currently, the digital economy is becoming an emerging strategic point for global resource factors in the next phase and is a development area highly valued by various countries. The digitization of assets is an inevitable choice for developing a new type of digital economy. Due to different national conditions, the models of asset digitization overseas are not suitable for promotion in China. Therefore, China's virtual property needs to develop its own technology and formulate regulations that align with China's national conditions, necessitating the prompt initiation of specialized legislation for data and online virtual property.

The country already has standardized measures to regulate financial assets, but for non-financial virtual property, there is still a legal vacuum. The "Civil Code," which came into effect in 2021, serves as the basis for subsequent specialized legislation on data and online virtual property. However, the provisions of the "Civil Code" currently cannot be directly referenced in resolving specific disputes. Feng Fan suggested that laws should clearly define the definitions and scope of data and online virtual property; clearly delineate the legal status of relevant entities in the field of data and online virtual property, regulate their behaviors, and promote open and healthy industrial development.

"It is also possible to encourage and support local governments to introduce 'pilot' regulatory policies, with local legislation taking the lead, playing the role of a reform test bed, and accelerating the development of Chinese-style non-financial Web3 and other metaverse technologies in various regions," Feng Fan pointed out. He also suggested guiding relevant groups and institutions to accelerate the establishment of various technical standards for data and online virtual property (including software, hardware, services, etc.), promoting independent technological innovation through standardized technical specifications for data and online virtual property business and behaviors, which can also strongly promote the development of China's digital economy.

In addition, Feng Fan also suggested that the state establish multiple online virtual property custody centers and certification centers, create a guarantee mechanism for purchasing domestic online virtual property, and support consumers in confirming their rights to domestic online virtual property. At the same time, he advocated for the promotion and encouragement of a digital financial insurance system to protect the legitimate rights and interests of issuers, trading platforms, and investors of non-financial online virtual property.

The Metaverse Must Prevent "De-materialization" and Guide Technological Standardization

National Committee Member Wu Jiezhuang: "Guide the Metaverse to 'De-materialize' and serve the real economy."

National Committee member and Legislative Council member of the Hong Kong Special Administrative Region, Wu Jiezhuang, submitted a proposal titled "Promoting the Healthy Development of the Metaverse Industry" during this year's Two Sessions. He proposed that the development of the "Metaverse" should not overly emphasize creating consumer-level virtual spaces, and it is necessary to prevent "de-materialization" and resource waste under the capital frenzy; it should encourage the application of technologies such as digital twins and 3D imaging in intelligent manufacturing, smart healthcare, and smart cities, promoting emerging technologies to better serve the development of the real economy, further innovating social governance models, and enhancing the intelligence level of public services.

Wu Jiezhuang stated that there are challenges in the current development of the metaverse industry. On one hand, the "double-edged sword effect" of advanced technologies is prominent, challenging traditional information security and ideological protection. On the other hand, there is currently a lack of mature regulation regarding the capital operation methods of the metaverse, financial payments in the virtual world, and NFTs. Currently, the development of the metaverse in the United States is progressing rapidly, and China is conceptually close to it, possessing a large market, while countries like Japan and South Korea are also actively promoting the development of the metaverse.

To this end, Wu Jiezhuang suggested that China should learn from the development of "digital currency," fully recognizing the issues of metaverse development and governance, actively promoting technological progress and infrastructure construction that supports the development of the metaverse, while also paying attention to forward-looking governance issues of the metaverse.

He specifically mentioned that the rich digital virtual vision constructed by the "metaverse" needs solid underlying technology support and should prevent excessive concentration of funds on the application layer under the concept of the "metaverse," which could lead to future "metaverse" upper-layer applications still being built on the technological foundation of American companies.

The proposal also suggested conducting preliminary research on a security governance system for the "metaverse"; strengthening regulation and guidance for the development of the metaverse, and accelerating the research and formulation of relevant laws and regulations; encouraging domestic enterprises to break through technological bottlenecks in the "metaverse."

National People's Congress Representative Min Weidong: Establish standardized processes to ensure compatibility among various metaverse technologies.

National People's Congress representative and Dean of the Metaverse Research Institute at Nanchang University, Min Weidong, proposed suggestions for further advancing legislation in the field of artificial intelligence during the Two Sessions and expressed his views on the development of the metaverse.

"The metaverse has significant development space in the future and will become more real, free, widespread, complete, and intelligent. The metaverse can be widely applied in gaming and entertainment, virtual malls and shopping, social networks and chatting, education and training, healthcare, architecture and design, financial services, smart cities, and the mining of metaverse data value, providing rich services and experiences for the public and generating new business forms and models."

"The development of the metaverse still faces technological bottlenecks, with many core technologies in areas such as metaverse headsets, near-eye displays, natural interaction, and large-scale scene generation awaiting resolution." Min Weidong pointed out that the standardization and normalization of metaverse technology are still relatively weak and need to be strengthened to ensure that various metaverse technologies can be compatible with each other.

In addition, the popularization and promotion of the metaverse require increasing the number of participants in the metaverse market, as well as formulating relevant laws, regulations, and policies to safeguard the security of data, information, and property involved in the virtual economy and applications within the metaverse.

Regarding the future development of the metaverse, Min Weidong stated that through core technological innovation and the construction and improvement of a virtual ecological system, it will support a more realistic virtual experience, more intelligent interaction methods, freer social interactions, broader application scenarios, and a more complete virtual economic system.

Clarify the Regulation of Digital Collectibles to Effectively Guide the Cultural and Tourism Industry

National People's Congress Representative Feng Qiya: Clarify the regulatory body for digital collectibles and implement an access system for digital collectibles platforms.

National People's Congress representative and Chairman of Shanghai Xinyun Investment Holding Co., Ltd., Feng Qiya, stated in an exclusive interview with Shanghai Securities Journal that while the digital collectibles industry is developing rapidly, current regulation is still primarily based on industry self-discipline and local regulations, lacking a top-down regulatory system with multi-departmental collaboration, and the legal definition of digital collectibles is still unclear.

She stated that in the issuance phase of digital collectibles, cultural and copyright regulatory departments should strengthen copyright protection and market access management for digital collectibles, ensuring the authenticity and copyright legality of digital collectibles. For key links such as trading and circulation, local financial regulatory departments should take the lead in supervising digital collectibles platforms, focusing on cracking down on illegal speculation and hype, and preventing the financialization and securitization tendencies of digital collectibles.

In response to the current lack of corresponding access thresholds in China's digital collectibles industry, Feng Qiya suggested establishing an access mechanism and implementing an access system for digital collectibles platforms. For links that may involve the issuance, circulation, and trading of digital collectibles, a whitelist mechanism could be established to explore gradual innovation. Additionally, platforms engaged in digital collectibles business should obtain blockchain information service filing and relevant qualifications.

Furthermore, she advocated for the establishment of a digital collectibles trading information disclosure platform to publicly disclose issuance processes, issuance prices, and other information, facilitating investors' understanding of market conditions and risks. Actively encouraging platform companies to engage in innovative behaviors, establishing relevant industry alliances for the digital collectibles industry, promoting industry self-discipline, formulating self-discipline norms, and strengthening industry self-discipline and regulation.

National People's Congress Representative Yan Meirong: Propose relevant laws on digital collectibles to effectively empower the development of the cultural and tourism industry.

National People's Congress representative, Vice Chair of the Shanxi Provincial Committee of the Chinese People's Political Consultative Conference, and Deputy Director of the Taiyuan Municipal People's Congress Standing Committee, Yan Meirong, recently suggested in an interview that relevant laws and regulations on digital collectibles should be introduced as soon as possible to effectively guide the development of digital collectibles in the cultural and tourism sectors.

Yan Meirong stated that currently, there are many deficiencies in the application of digital collectibles in the integration of culture and tourism in China. Relevant departments have insufficient understanding of digital collectibles, lack of policy support, and a shortage of market-oriented means and incentive mechanisms. Digital cultural products and related cultural resources have not been effectively explored and utilized, leading to severe homogenization, insufficient product innovation, and a lack of regional cultural characteristics and professionals who understand both technology and cultural tourism knowledge.

The innovation and integration of "digital collectibles+" with tourism, museums, and intangible cultural heritage can uplift the tourism industry, invigorate museums, highlight urban IPs, and promote traditional culture among young people.

To this end, she suggested formulating and improving relevant policies, introducing implementation plans for "digital collectibles + tourism + cultural relics + intangible cultural heritage," and incorporating urban digital IP into urban development strategic planning; strengthening regulation over issuance platforms and product quality, and enhancing the reflection of the content and value of collectibles.