That ban helped set the path for the development of the Chinese metaverse, experts say, since it decoupled virtual spaces from digital assets. “The key difference [in the metaverse] between China and the rest of the world is it’d be heavily regulated in a centralized manner,” says Zhengyuan Bo, a partner at China-focused research firm Plenum. “And there’s only limited space for growth without [digital assets] for monetization.”

It isn’t just crypto that the government has cracked down on. Gaming—which has formed a pillar of the…