China has “three red lines: crypto trading, over-the-counter transactions, and mining,” said Jason Kam, founder of Folius Ventures, an investment fund focused on Asian crypto startups. “At its core, the Chinese government is going to dampen speculation and capital outflow, but for the remainder of web3, such as developers writing code, the government has a ‘one eye open, one eye closed’ approach.”

“There are informal crypto markets that are operating in kind of a legal gray area,” said Kim Grauer, director of research at Chainalysis. “We’ve talked with merchants who are in Sub-Saharan Africa and Latin America who are purchasing goods from China, using cryptocurrency in this informal market capacity. We can see people within China are still visiting major centralized exchanges.”

If anyone could be said to be the face of the CCP’s preferred version of web3, it may be He Yifan, the chief executive of Beijing-based Red Date Technology. The company operates a hub of sorts for developers to build applications for everything from NFT transactions to drug-delivery tracing – all running on permission-based blockchains under state oversight.

Unlike on a traditional blockchain like Ethereum, transaction costs are denominated in fiat currency and fixed at 0.05 yuan per transaction. Daily transactions on Red Date’s Blockchain-based Service Network have surged to over 1 million, according to He, comparable with volumes on Ethereum.