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Arts & Communication Blockchain and royalties in China’s art market

serving as a bridge that introduces and legitimizes the to global standards in blockchain technology will not
concept of NFTs and resale royalties within the broader art only enhance China’s position in the global digital
community. art market but also ensure that the implementation
Simultaneously, market education becomes of resale royalties through blockchain aligns with
indispensable. Stakeholders, including artists, collectors, international best practices. 146
and legal professionals, must be educated on the potential The effective implementation of resale royalties through
of blockchain technology not just as a novel transactional blockchain in China necessitates a careful balancing act
platform but as a robust mechanism for enforcing between fostering technological innovation and ensuring
copyright protections and ensuring fair compensation robust legal and regulatory oversight. By addressing these
through resale royalties. Workshops and seminars can complexities and adopting strategic recommendations,
elucidate the operational dynamics of blockchain, the legal China can create an environment that nurtures the growth
implications of NFTs, and the benefits of integrating resale of the digital art market while safeguarding artists’ rights
royalties within this digital ecosystem. to resale royalties.

4.2.3. Recommendations for implementing resale 4.3. Summary
royalties through blockchain
China’s stance on blockchain technology and its
The recommendations for implementing resale royalties applications, including NFTs, is markedly different from
through blockchain are listed as follows: that of other countries. While the Chinese government
(a) Enhanced legal clarity and copyright enforcement: has banned digital currencies, it strongly supports the
There is considerable misunderstanding regarding the use of blockchain technology in various sectors of its
rights purchasers obtain when purchasing an NFT. economy. This approach is part of a broader vision to
Some believe they are only purchasing the metadata incorporate blockchain into different aspects of economic
related to the work, while others think they are development. The Chinese government encourages the
obtaining the underlying artwork and all associated use of blockchain for practical applications, viewing it
rights. Implementing strict copyright protection as a pivotal element in the new round of technological
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systems within NFT platforms can safeguard digital innovation and industrial transformation. This is evident
creators’ rights and ensure they receive their rightful in its substantial investments in blockchain infrastructure
resale royalties. and research, aiming to integrate the technology into fields,
(b) Infrastructure development for secure royalty such as supply chain management, intellectual property,
transactions: Accelerating the creation of legal and and digital asset management.
technological infrastructure is crucial for the secure By avoiding the volatility associated with
issuance and trading of NFTs and the seamless cryptocurrency markets, China aims to foster a stable and
execution of resale royalties. This infrastructure must
facilitate transparent and verifiable transactions that controlled environment for the development of blockchain
uphold artists’ rights to royalties. technologies. This approach is intended to minimize
(c) Preventive measures against misuse: Comprehensive financial risks while leveraging the benefits of blockchain
for secure and transparent transactions. The Chinese NFT
strategies to prevent the misuse of NFTs for illegal market, uniquely termed “digital collectibles,” reflects
activities must be implemented, ensuring that this cautious and controlled approach. Unlike the global
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the system for resale royalties remains untainted by NFT market, which is heavily influenced by speculative
fraudulent practices. This entails closely monitoring NFT trading and the use of cryptocurrencies, Chinese digital
projects and working with law enforcement to ensure
adherence to anti-fraud and financial legislation. 135 collectibles are primarily traded using fiat currency and are
(d) Cultural and market-specific strategies: Promoting focused on the primary market. This focus limits the scope
the acceptance of blockchain and NFTs within the for speculation and aligns with the government’s broader
art community and educating stakeholders about strategy of risk aversion in digital asset markets.
blockchain’s potential benefits are pivotal. These Implementing resale royalties through blockchain in
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efforts should be complemented by policies supporting China could offer significant benefits, such as increased
blockchain development and incorporating resale transparency in transactions and fair compensation for
royalties into copyright law, balancing innovation artists. However, the absence of a secondary market poses
with regulation. a challenge, as it limits opportunities for artists to gain
(e) International collaboration for global standards: from the appreciating value of their works post the initial
Engaging in international collaboration and adhering sale. The government’s cautious stance on digital assets also

Volume 3 Issue 1 (2025) 18 doi: 10.36922/ac.2875