NFT App Blocks Users in China, Sending Digital Tokens Plunging

    Nine months after officially declaring all cryptocurrency transactions illegal, China still has the power to roil digital assets.
    By: BLOOMBERG
    | Updated on: May 30 2022, 14:19 IST
    STEPN uses blockchain technology that lets users buy virtual sneakers in the form of nonfungible tokens. 
    STEPN uses blockchain technology that lets users buy virtual sneakers in the form of nonfungible tokens.  (AFP)
    STEPN uses blockchain technology that lets users buy virtual sneakers in the form of nonfungible tokens. 
    STEPN uses blockchain technology that lets users buy virtual sneakers in the form of nonfungible tokens.  (AFP)

    Nine months after officially declaring all cryptocurrency transactions illegal, China still has the power to roil digital assets. 

    GST, a token linked to the “move-to-earn” fitness app STEPN, fell about 10% after the app's operator said Thursday that users in China would effectively be barred from using it starting July 15. Another cryptocurrency tied to the app called GMT plunged more than 30% before rebounding, data from CoinGecko show. 

    STEPN uses blockchain technology that lets users buy virtual sneakers in the form of nonfungible tokens, which they can then use to earn GMT or GST coins by walking or running. With STEPN shutting off GPS services to users located in China, those customers will no longer be able to accumulate the tokens.  

    “STEPN has always attached great importance to compliance obligations and always strictly abides by the relevant requirements of local regulatory agencies,” it said in the Chinese-language tweet, without specifying whether Chinese regulators had explicitly requested the move. 

    While China has banned all trading and mining of cryptocurrencies, it still permits NFTs and blockchains -- but with restrictions aimed curtailing speculation. It relies on so-called permission-based blockchains that operate under state oversight, and there's no secondary market for NFTs like OpenSea.  

    How China Is Embracing NFTs, With Strings Attached: QuickTake

    STEPN users earn Green Satoshi Tokens (GST) when they walk or run, and can then use those to level up their NFT sneakers. When their NFT sneakers have reached a certain level, they receive Green Metaverse Tokens (GMT). 

    Since starting in December, STEPN has garnered more than 580,000 users worldwide, and about 38,000 of them were active in the last 24 hours, according to data from Dune Analytics. The data doesn't break out users by country.  

    In January, STEPN said it raised $5 million from investors including Sequoia Capital and Alameda Research.

    The company said in the tweet that it's never engaged in any direct business in China, and that it hasn't provided any way of downloading its app there. It will shut off GPS access to users whose IP address or GPS location shows they're in the country. 

    GMT was listed in March. Its market capitalization has fallen to around $600 million since peaking at $2.4 billion in April, according to CoinGecko. Solana, the native token of the blockchain STEPN uses for its app, fell as much as 9.6% on Friday. 

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    First Published Date: 30 May, 14:19 IST
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