Chinese authorities flag NFT and metaverses as potential Ponzi schemes

Metaverses and NFT may prove to be bubbles, Ponzi schemes, or other forms of financial fraud. This is stated in the official blog of the Central Political and Legal Affairs Commission of the Communist Party of China.

The commission is charged with implementing the party leadership’s administrative-political and legal directives.

The commission noted the existing hype in the segment. Citing media, the blog’s authors recalled that a plot of virtual land on the platform The Sandbox sold for $4.3 million, beating the previous record set by Decentraland—$2.43 million.

Also in this virtual world, Singaporean singer JJ Lin bought three homes for about $113,000.

Regarding Decentraland, the authors note that the platform clearly states a shortage of virtual land for users. Parcels are sold at auctions, and buyers bid with NFTs.

As with any market where the supply is finite, prices rise as more people enter. The authors argue that hyping in the virtual world is easier than in the real one.

They also noted a “vague” understanding in society of the metaverse concept itself.

“There is no shortage of concepts about the metaverse, but it lacks a widely accepted definition,” the commission said.

The blog stresses that many articles and reports point to a bubble in the price of digital collectibles, and associate NFTs with risks such as money laundering and financial fraud.

In September, state media warned of a bubble in the NFT sector in China.