A series of recent announcements have put China’s metaverse ambitions in the spotlight. But what does this mean for national crypto policy?

Since 2021, China has taken a tough stance on cryptocurrency trading. And unlike startups in other countries, the country’s nascent metaverse sector had to avoid a strict ban on handling cryptocurrencies.

Now, state support for the industry raises questions about the sustainability of the government’s current stance.

One of the cities vying to be China’s preeminent metaverse hub is Zhengzhou in Henan province.

Therefore, the city government recently announced an ambitious plan to grow the emerging metaverse sector into an annual 200 billion yuan industry by 2025.

To promote the growth of this sector, the city has set up a 10 billion yuan investment fund. Other incentives for Metaverse companies in the region include rent subsidies and subsidies.

The Zhengzhou city plan lists blockchain as a key technology in the Metaverse space, alongside its announced funding policy. But companies without access to the world’s major digital assets may struggle to innovate at the same pace as others.

Instead of the major public blockchains typically built by metaverse developers in other countries, Chinese tech companies often deploy private or state-backed blockchains.

In a document outlining its vision, the Zhengzhou government said it would encourage the development of consortiums and private blockchains. It will also establish a digital marketplace for NFTs that are not subject to the same restrictions as alternative tokens.

Beijing publishes Web3 white paper

Following the launch of Zhengzhou’s Metaverse strategy, the Beijing Municipal Authority has published a groundbreaking white paper on Web3 Innovation.

The white paper was reportedly released by the Beijing Municipal Science and Technology Commission at the high-profile Zhongguancun Forum.version of Web3 Innovation and Development White Paper After that, it was also reported in the Chinese media.

While not an official policy document, the white paper outlines an innovation blueprint that gives insight into Beijing’s evolving approach to the subject. Importantly, it underscores the state’s intent to use the policy to accelerate innovation in this area.

Like the Zhengzhou government, policymakers in Beijing see blockchain as crucial to the growth of China’s digital economy. And both cities know they can support innovation in the metaverse space, as recent announcements from both cities show.

according to summary A Zhengzhou white paper posted by Binance CEO Changpeng Zhao cites blockchain as one of the key Web3 technologies. The report considers this to be a key component of Web3’s “infrastructure layer”, alongside AI and communication networks.

Is China Softening Its Crypto Policy?

Commenting on the document, CZ said the timing was interesting given the imminent launch of a new regulatory framework for cryptocurrency businesses in Hong Kong.

Next week, Hong Kong will introduce comprehensive new regulations governing the cryptocurrency sector. While some argue the new rules are too restrictive, others welcome the clarity it provides businesses.

Moreover, the strict licensing system is a vast improvement over the restrictions currently imposed in mainland China.

However, as local governments across the country now openly celebrate the benefits of blockchain technology, a blanket ban on cryptocurrency trading seems increasingly unsustainable.

Indeed, Chinese tech companies can deploy state-sanctioned or private blockchains. But without access to cryptocurrencies like Ether, developers are out of touch with global trends.

Public blockchains like Ethereum are one of the main drivers of innovation when it comes to the burgeoning metaverse industry. And to be competitive in space, China may not be able to ignore its importance forever.

Global markets could explode if governments decide to lift crypto bans.

The wave of moves by the Chinese government to ban cryptocurrency trading in 2021 has been felt around the world. And almost all major cryptocurrencies have hit their market capitalizations in the short to medium term. Now, if that decision is reversed, the opposite can happen.