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Metaverse Frenzy Grips Chinese Investors, Despite Warnings From State Media

Small and medium Chinese investors are “licking the blood on the edge of a knife,” when investing in the Metaverse. At least that is what a report in a Chinese state-owned paper claims.

Since Mark Zuckerberg announced that Facebook will be rebranding into Meta Platforms, companies have been racing to claim the space.

The Metaverse will be a digital space where users can interact with each other and their virtual environment. The tech could revolutionize the way we work, travel and socialize. It also has huge revenue potentials for tech companies, which is why many have seized the opportunity.

This includes Chinese companies, like its tech giants Tencent and NetEase. The two companies are the two largest gaming businesses in China. Moreover, telecom giants China Mobile, China Unicom and China Telecom partnered to form an industry committee dedicated to the idea.

Small investors are jumping on the trend as well, leading to a stock frenzy. That’s why a piece published in the Chinese Economic Daily warned investors against jumping on Metaverse stocks.

Chinese Metaverse Craze

The piece, published on Sunday, drew attention to the stock craze. It cited Decentraland as an example, which is a metaverse game where users can own and sell land.

A piece of land in a highly prized virtual location recently sold for $2.43 million, the article writes.

The pandemic has also contributed to the craze, as people are spending more time on the net. However, the article warns that it is too early to use Metaverse plans to value companies at a premium.

In fact, the hotter the metaverse gets, the more the public should stay calm, the article warned.

The article wrote about a large number of social, ethical issues with the Metaverse. Due to those issues, it argued, the Metaverse will come with great uncertainty.

This risk is particularly important in China, where state regulators have already cracked down on tech companies. Chinese officials are not shy when it comes to cracking down on tech that they consider harmful.

Chinese Big Tech Crackdown

China recently cracked down on its tech sector, including cryptos. Some of the concerns the officials had were risks to investors and harm to users. This was one of the reasons behind a crypto ban and harsh regulations on gaming.

Earlier, an article on People’s Daily warned investors against scams related to the metaverse and NFTs. The piece claimed that firms were eager to register trademarks that included the new trend. Many of these firms had nothing to do with metaverse tech.

The biggest issue was, however, the control of data on Chinese citizens by companies with controlling interests outside China.

That is the reason why China does not allow companies like Google, Meta, Uber in. These companies rely on collecting large quantities of user data, something which Chinese officials see as a national security risk.

That is also the reason why China cracked down on Wall Street IPOs of Chinese companies. Regulators even asked DiDi, a Chinese equivalent to Uber, to delist from the U.S. exchanges.

However, the relative isolation of the Chinese tech space means that there could be a great opportunity for Chinese investors. Metaverse companies in China won’t have to compete with Meta’s $10 billion investment.

Metaverse Crypto, NFTs Surging

The metaverse craze is gripping investors worldwide. Many have discovered the importance of blockchain tech for it, especially in form of Non Fungible Tokens (NFTs).

NFTs and gaming cryptos might help link up various metaverse games and spaces, industry insiders think. Games might allow players to transfer their skins in form of NFTs from a different game. Moreover, several games might use a common currency, which the players could exchange with each other.

Others point to games like Second Life, where users can craft their own identities how they want.

That is why gaming cryptos and NFTs have been surging since Facebook’s rebranding. Firms like Metaverse Group, a digital real estate company are buying up digital land.

Sandbox, a gaming platform, recently drew millions in funding for its metaverse launch. Its token SAND shot up 100% last week. Enjin Coin, the crypto powering the Enjin gaming and NFT ecosystem reached $3.2 billion in market cap.

In China, the space is still developing slowly due to pressure from Chinese regulators. Last week, Chinese firm 36kr Holdings gave away 1124 metaverse-themed digital collectibles.

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These were, in some aspects, similar to NFTs. Namely, they are unique digital assets. However, users cannot buy or sell them, as China considers trading digital assets as a risk to financial stability.

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