The digital collection platform will usher in a major change

From "wild growth" to "return to value".

As the saying goes, wind precedes rain, and strong winds come before a rainstorm. If the wind in the digital collection industry at the beginning of the year was still a warm wind that intoxicated collectors and made the platform a golden platform, then the several gusts of wind that rose from the ground from the end of March to now have shaken the industry.

First, at the end of March, the WeChat public platform blocked dozens of digital collection platforms on the grounds that "they had not obtained legal permission or licenses, and had published, disseminated or engaged in related business activities without obtaining legal permission or licenses."

Although WeChat’s “governance” of digital collections cannot represent the attitude of supervision, this large-scale ban has made the industry start to seriously consider the compliance issues of digital collections for the first time .

The WeChat public platform added new clauses on digital collectibles trading in its June "Code of Conduct", which clearly stated that engaging in virtual currency or digital collectibles business without obtaining approval documents or relevant licenses is an illegal business behavior, and providing secondary trading services for digital collectibles will result in account suspension.

On April 8, the "2022 China Digital Collection Self-Discipline Convention Release Conference" was held, co-organized by Hongdong Digital Collection, Dongyiyuandian, and Lingjing Collection, and supported by QuChain Technology, aiming to explore how the digital collection industry can develop safely and orderly.

On April 13, the three major associations of China Internet Finance Association, China Banking Association, and China Securities Association issued the "Initiative on Preventing NFT-Related Financial Risks" . The initiative quickly swept the entire digital asset industry, attracting half of the industry at the time to tweet in support.

This incident can be described as the most severe storm in the digital collectibles industry in the first half of the year.

It should be noted that the above initiative is a very dangerous signal. In May last year, the China Internet Finance Association, the China Banking Association, and the China Payment and Clearing Association issued the "Notice on Preventing the Risk of Virtual Currency Trading Speculation". Four months later, on September 24, the People's Bank of China, together with the Central Cyberspace Affairs Commission, the China Banking and Insurance Regulatory Commission and other ten ministries and commissions, jointly issued the "Notice on Further Preventing and Dealing with the Risk of Virtual Currency Trading Speculation", which clearly stated that virtual currency-related business activities are illegal financial activities. Since then, virtual currency has completely disappeared from the mainstream vision.

The next day, the Metaverse Industry Committee of the China Mobile Communications Association and the Blockchain Professional Committee of the China Communications Industry Association jointly issued the "Self-Discipline Requirements for Regulating the Healthy Development of the Digital Collection Industry" based on the initiatives of the three associations.

The industry conventions and initiatives in April had far-reaching impacts. Even though many small and medium-sized digital collectibles platforms still forced their way into the secondary market after that, the overall hype has begun to gradually decline.

On June 26, initiated by the United Kingdom Cultural Property Exchange, member units of the Cultural Property Exchange Alliance including Anhui Cultural Property Exchange, North Cultural Center, Southern Cultural Property Exchange, Hubei Huazhong Cultural Property Exchange, Jiangsu Cultural Property Exchange, Shanghai Cultural Property Exchange, Shandong Cultural Property Exchange, Tianjin Cultural Property Exchange, and Zhejiang Cultural Arts Exchange held a national cultural exchange alliance meeting in Changsha.

In addition to stating that it will not conduct securitization-like transactions or transactions that violate national laws and regulations, the meeting directly proposed "through compliant operations, calling on relevant national regulatory authorities to introduce corresponding policies, granting cultural exchanges digital asset trading functions, and building a healthy, innovative, and active cultural digital asset trading market." The ambitions of cultural exchanges in various places to establish a compliant circulation market for digital collections are obvious.

On June 30, under the leadership of the China Cultural Industry Association, nearly 30 institutions jointly launched the "Digital Collection Industry Self-Discipline Development Initiative" in Beijing. Opposing secondary transactions and speculation and raising entry standards have become the core consensus for the high-quality development of the industry.

The participating parties include professional institutions and associations in the cultural and tourism industry, cultural central enterprises, IP institutions, and leading Internet technology companies such as Ant, Tencent, Baidu, and JD.com. It is currently the self-regulatory convention with the widest coverage in the industry .

The three events in June were no different in theme from previous conventions and initiatives. The participation of more influential organizations raised the compliance issues of digital collection platforms to an unprecedented level.

On the other hand, the chaos on the digital collection platform has never stopped since April.

First, there was news that a suspected staff member of "Mammoth Digital Collection" had run away, and then there were rumors that "TT Digital Collection", "Xiangxun" and "Tianqiong Digital Collection" had also run away.

If the previous negative news was mostly rumors, in June, the "negative events" on the digital collection platform began to escalate significantly.

On June 27, "Yu Zang", a subsidiary of listed company Hang Seng Electronics, officially announced that since the country has not yet issued clear laws, regulations and policy documents in the field of digital collectibles, after careful evaluation, the platform decided to suspend the sale of digital collectibles from the 27th.

On June 28, rumors that Guangyi Digital Collection was suspected of manipulating secondary market prices and was running away directly detonated the digital collection circle . The Genesis Medal of the platform fell from its highest point of around 30,000 yuan to less than 1,000 yuan within a few days. The news made the digital collection market, which had already fallen to a freezing point, even worse.

The "Digital Collectibles Industry Self-Discipline Development Initiative" released on June 30th cast a dark cloud over the sky of the digital collectibles industry in the second half of the year.

On July 1, "Yingjing" stated in an announcement that "nearly 30 institutions jointly launched the "Digital Collection Industry Self-Discipline Development Initiative" in Beijing to oppose secondary transactions and speculation... In response to the national call, the platform has decided to close the [Transfer] function from July 2, 2022 after careful evaluation."

"Changsheng Digital Innovation" issued an "Announcement of Suspension of Operations" and stated that "today's digital collectibles market still has many pain points that need to be resolved. IP copyrights are difficult to confirm, market supervision is becoming stricter, and market mechanisms are failing. Old players are trapped in the secondary market, and new players cannot enter the secondary market for digital collectibles. It has reached a "dead end"; our company has decided to withdraw from the digital collectibles circle, and here we also call on all digital collectibles users to look at digital collectibles rationally and not enter the market easily ."

Ironically, Changsheng Digital just issued a statement two days ago denying poor management and launched a number of promotional and new customer acquisition activities. In just two days, there was such a sharp contrast between the two. The rules changed at any time, and the gameplay changed overnight, which is also a microcosm of the chaos in the entire industry.

What is even more interesting is that at this very sensitive time point, several platforms have suspended their circulation functions for various reasons.

"Hongguo Shuzang" issued an apology letter on July 1, " Because the third-party transaction payment was maliciously reported by the technology team, it triggered risk control and closed the main payment issue. The copyright transfer center is temporarily closed for maintenance . Users can withdraw cash normally, and free transfer is temporarily enabled."

"Moyuan" announced today that " Moyuan Technology is preparing to introduce strategic investment (state-owned capital). In order to implement compliance and healthy development of the digital storage industry, the "consignment" function of the Moyuan platform will be temporarily closed from 0:00 on July 3."

"Ayo Digital Art" issued the "Announcement on Refunds from the Platform Due to Relevant Policy Restrictions and User Inability to Make Normal Payments", stating that "due to the obstruction of the company's blockchain technology development and the rejection of the blockchain registration review, the payment system could not be upgraded normally. In order to actively respond to national policies and protect the interests of all Ayo users. So far, this platform has decided to cancel this event, and the distribution of previous event collections has been temporarily slowed down and the subsequent distribution time will be subject to notification. In addition, all consumption amounts will be refunded to all users with consumption records on this platform."

"IBear" released the "Temporary Closure of Payment" today, "The platform operator has moved from Beijing to Hainan. According to relevant policies, the payment entity also needs to be re-changed. We are currently actively connecting with payment manufacturers and re-connecting with payment interfaces. After the payment is connected, the consignment market will be reopened."

The wind is blowing hard, dark clouds are rolling, and a rainstorm is about to come.

It is foreseeable that the regulatory authorities will take action against the chaotic digital collection platforms in the second half of the year. However, many industry insiders told Shuzangjian that it is almost impossible for the digital collection industry to be hit by a full-scale crackdown similar to virtual currencies being deemed illegal.

Whether the secondary market can operate in compliance with regulations will remain the focus of the second half of the year. However, regardless of whether the regulatory level will ultimately allow the existence of the secondary market, the secondary market built by digital collection platforms themselves, which does not have relevant qualifications, has no thresholds, and is not subject to any supervision, may no longer exist.

On the other hand, the digital collectibles platform itself has fallen into an endless vicious cycle. The current growth rate of new users in the digital collectibles industry can no longer support the number of nearly a thousand platforms . What is even more frightening is that the number of platforms is still increasing, while users who made profits through the secondary market in the early stage are gradually leaving the market.

The keyword for digital collection platforms will shift from "wild growth" in the first half of the year to "value return" . Nearly a thousand platforms will be washed away by the heavy rain in the second half of the year. At that time, platforms that focus on IP quality, collection empowerment, and user management will become the next round of players.