A blockchain governed by the state, not the market
In early 2022, China moved to claim its share of a $41 billion global market without surrendering the regulatory authority it prizes above all else. By launching a state-governed blockchain infrastructure for NFTs — transacted entirely in yuan and overseen by state-owned institutions — Beijing demonstrated that it sees no contradiction between embracing digital innovation and maintaining absolute control over it. The move is less a concession to the open internet than a restatement of China's enduring conviction: that markets may flourish, but only within walls the state has built.
- China's 2021 cryptocurrency ban left a $41 billion NFT market sitting just beyond its regulatory reach — an uncomfortable gap Beijing moved quickly to close.
- The BSN-DDC platform threads a careful needle, enabling digital collectibles to be bought and sold in yuan while keeping them structurally quarantined from banned cryptocurrencies.
- Tech giants Baidu, JD.com, and Tencent have already rallied behind the initiative, even quietly rebranding their NFT products as 'digital collectibles' to align with state-preferred language.
- Ten blockchains — including modified versions of Ethereum and Corda — will operate under the umbrella of state-owned entities like China Mobile and China UnionPay, ensuring no transaction escapes official visibility.
- The central tension now is whether a state-managed, permissioned system can genuinely satisfy a market that, elsewhere in the world, defines itself by decentralization and openness.
Beijing has engineered a way to participate in the NFT boom without loosening its grip on financial technology. In early 2022, China unveiled plans for the Blockchain Services Network Distributed Digital Certificate — BSN-DDC — a state-controlled blockchain built specifically to host NFT transactions, denominated entirely in Chinese yuan and governed under strict regulatory oversight.
The platform's architecture reflects a distinctly Chinese philosophy. Unlike the open, decentralized blockchains that define the global NFT market, the BSN-DDC operates as a permissioned chain — one governed by a specific authority, in this case the state. He Yifan, CEO of Red Date Technology and the infrastructure's technical backer, has been clear: any system operating in China must allow regulators to intervene when needed. Public blockchains, by that standard, are simply illegal.
The yuan-only transaction model is the platform's most deliberate feature. By ensuring that NFTs are purchased with national currency rather than cryptocurrency — which China banned in 2021 — Beijing draws a firm line between digital collectibles and the crypto ecosystem it has rejected. Major technology firms including Baidu, JD.com, and Tencent have embraced the initiative, and have notably begun calling their offerings 'digital collectibles' rather than NFTs, a linguistic shift that mirrors the government's own preference for distance from crypto terminology.
The BSN-DDC will integrate ten blockchains, among them modified versions of Ethereum and Corda, all operating beneath a canopy of state-owned institutions: China Mobile, China UnionPay, and the State Information Centre. The layering of oversight is thorough by design.
What the move ultimately reveals is a calculated refusal to be left out. The global NFT market had grown too large — and too economically significant — to ignore. Rather than allow it to develop beyond state reach, China built its own version. Whether a controlled, permissioned marketplace can truly replicate the energy of a decentralized one remains the open question at the heart of the experiment.
Beijing has found a way to have it both ways. In early 2022, China announced plans to launch a state-controlled blockchain infrastructure designed specifically for NFTs—a move that allows the government to participate in a market that exploded to $41 billion the year before, while maintaining its hard line against cryptocurrency trading, which it banned in 2021.
The infrastructure, called the Blockchain Services Network Distributed Digital Certificate (BSN-DDC), represents a distinctly Chinese approach to blockchain technology. Rather than the decentralized, open-market platforms that define most blockchain systems globally, the BSN-DDC operates as what regulators call an "open permissioned chain"—a blockchain governed by a specific entity, in this case the state. The distinction matters because public blockchains are illegal in China. Any online system operating in the country must allow regulators to intervene if illegal activity occurs, according to He Yifan, CEO of Red Date Technology, the company providing technical support for the BSN.
The new platform will handle all NFT transactions in Chinese yuan, not cryptocurrency. Users will be able to purchase and manage digital collectibles through the system, with all fees denominated in the national currency. This structural separation—NFTs on one side, cryptocurrencies on the other—allows Beijing to signal openness to the booming digital asset market while enforcing the cryptocurrency restrictions it put in place last year.
Several major Chinese technology companies have already aligned themselves with the initiative. Baidu, JD.com, and Tencent Holdings are among the firms supporting the new blockchain. Notably, these companies have begun referring to their NFT offerings as "digital collectibles" rather than NFTs—a linguistic choice that reflects the regulatory environment and the government's preference for terminology that distances the products from the cryptocurrency world.
The BSN-DDC will integrate ten different blockchains, including modified versions of Ethereum and Corda, all operating under state oversight. The infrastructure itself is backed by state-owned entities: China Mobile, China UnionPay, and the State Information Centre. This layering of state ownership and control ensures that Beijing maintains visibility into and authority over all transactions flowing through the system.
The move reveals a calculated strategy. Rather than ceding the NFT market to other countries or allowing it to develop outside state purview, China is building its own controlled version. The $41 billion global NFT market in 2021 had grown large enough that ignoring it was no longer viable. By creating a parallel infrastructure that operates independently from cryptocurrencies, Beijing can capture economic activity and tax revenue while maintaining the regulatory grip it has prioritized since cracking down on crypto trading and mining last year. The question now is whether this state-managed approach will satisfy both the market's appetite for digital collectibles and the government's demand for control.
Notable Quotes
In China, public chains are illegal. The state requires all online systems to permit regulators to intervene in case of illegal activities.— He Yifan, CEO of Red Date Technology
The Hearth Conversation Another angle on the story
Why would China bother building its own blockchain for NFTs when it could just let the market operate freely like everywhere else?
Because China doesn't see those as the only two options. The government wants the economic benefits of the NFT boom—the tax revenue, the innovation, the market activity—without losing control. A decentralized blockchain is, by definition, something they can't fully monitor or regulate.
But doesn't that defeat the purpose of blockchain? I thought the whole point was that it's decentralized.
Yes, and that's exactly why public blockchains are illegal in China. The state requires every digital system to have a kill switch—a way for regulators to step in. A true blockchain doesn't have that. So they built something that looks like blockchain technology but operates more like a traditional database with state oversight.
So when JD.com and Baidu call their NFTs "digital collectibles," that's not just marketing?
It's partly that, but it's also linguistic distance from cryptocurrency. The government banned crypto explicitly. By calling these things digital collectibles and running them on a state-controlled system in yuan, they're creating a category that feels separate, safer, more legitimate.
Does this actually work? Can you really have a blockchain that's controlled by the state?
Technically, yes. It's not a blockchain in the purest sense—it's more of a distributed ledger with permission layers. But it does the job: it creates a record, it enables transactions, and it gives the state exactly what it wants: visibility and control.