Move-to-earn game STEPN will block geolocation services for users in mainland China starting from mid-summer. In the wake of the announcement, the token’s price dropped significantly, losing 40% of its value within hours.
As shared in the official announcement, the popular fitness-focused game revealed that it would be ending the provision of GPS services to China-based IP addresses on July 15th. The company also stated that local users would have to make their own arrangements for their virtual assets before the change is implemented.
The concept of STEPN is based on GPS, which tracks the steps and movements of users who’ve bought virtual NFT sneakers, and converts them into in-game utility tokens.
Launched at the end of 2021, STEPN received massive hype around the world, generating around $20M in profit during the first quarter of 2022. The game accounts for over 580,000 global players at the time of writing, though it’s not clear how many users of the play-to-earn game are based in China.
Prices Drop
Following the announcement, the price of the project’s in-game GMT token lost over 40% of its value, dropping from $1.397 to lows of $0.8349 early on Friday, according to CoinMarketCap. GMT has made a slight recovery to trade at around $0.943 at the time of writing, but remains well short of its previous high.
The floor price and trading volumes of STEPN’s NFT sneakers on NFT marketplaces have dropped accordingly in the past 24 hours. The average floor price of the Solana-based NFT sneakers declined by 40% to 7.6 SOL, down from 12. The trading volume also dropped by more than 53%, down from $4.72K to $2.22K on the Magic Eden NFT marketplace.
Regulatory Concerns?
STEPN has yet to explain what led the team to make such a decision, but did hint towards compliance with local regulatory policies in their Twitter (NYSE:TWTR) thread.
“STEPN has always attached great importance to compliance obligations and always strictly abides by the relevant requirements of local regulatory agencies. We also remind users to beware of scams,” the post said.
The Chinese government is known for its fear of foreign surveillance and strict policies against technologies for digital recording which are not provided by the government itself. Last year the country cracked down on the use of Tesla (NASDAQ:TSLA) cars by state government officials due to the maker’s facial recognition cameras. The government of China stated that they could be used for spying purposes to secretly gather information related to the state.
The country’s general prosecutor increased levels of scrutiny towards the metaverse and NFTs earlier this year. Officials in China have warned of severe punishments for financial crimes like money laundering and illegal fundraising which are carried out through NFTs and the metaverse.
