A Chinese court in the city of Hangzhou has said that non-fungible token (NFT) collections are online virtual property that must be protected by Chinese law.
A November 29 article published by the Hangzhou Internet Court – a court specializing in the Internet – shared by crypto blogger Wu Blockchain on Dec. 5 reveals NFT-friendly language after the country began cracking down on cryptocurrencies in 2021, leaving NFTs in a legal gray area.
Translated, the article says that NFTs “have the object characteristics of property rights such as value, scarcity, controllability, and marketability” and “belong to the virtual property of the network” that “should be protected by copyright laws.” our country.”
The court decided that it was necessary to “confirm the legal attributes of the digital collection of NFTs” for a case and admitted that “Chinese laws currently do not clearly stipulate” the “legal attributes of NFT digital collections.”
The court decree was filed in a case in which a tech platform user, both unnamed, sued the company for refusing to complete a sale and canceling his purchase of an NFT from a “flash sale” because the user provided a name and phone number that allegedly did not match your data.
“NFTs condense the original artistic expression of the creator and have the value of related intellectual property rights,” the court said. He added that NFTs are “unique digital assets formed on the blockchain based on the mechanism of trust and consensus between the nodes of the blockchain.”
due to this reasonthe court said that “NFT digital collections belong to the category of virtual property” and the transaction in the legal case is considered as the “sale of digital goods through [la] Internet”, which would be treated as an electronic commerce business and “regulated by the ‘Electronic Commerce Law'”.
This occurs after The Shanghai Higher People’s Court issued a document in May stating that bitcoin (BTC) is still subject to property rights laws and regulations despite the country’s ban on cryptocurrencies.
With its cryptocurrency ban, China has worked to separate NFTs from cryptocurrencies in a government-backed blockchain project to support the deployment of non-crypto NFTs paid for with fiat money.
The government remains vigilant to ensure its population resists “NFT speculation,” as described in an April joint statement between the China Banking Association, the China Internet Finance Association and the China Securities Association, which warned the public about the “hidden risks” of investing in NFTs.
China is not the only jurisdiction that includes NFTs in property laws. A Singapore High Court judge relied on existing property laws in an October case comparing NFTs to physical goods like luxury watches or fine wine, saying “NFTs have emerged as a collector’s item highly coveted.”
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