China updates its regulations on NFTs
Nonfungible token (NFT) collections, according to a Chinese court of the internet in the city of Hangzhou, are forms of online virtual property that need to be safeguarded by Chinese law.
In a case where it had to affirm the legal characteristics of NFTs, the court stated that NFTs are “unique digital assets” that “belong to the category of virtual property.”
Hangzhou Internet Court article from November 29 that cryptocurrency blogger Wu Blockchain uploaded on December 5 discloses the NFT-friendly language when the nation started to tighten down on cryptocurrencies in 2021, placing NFTs in legal limbo.
According to the article’s translation, NFTs “belong to network virtual property” and “should be protected by the laws of our nation” since they “have the object characteristics of property rights such as value, scarcity, controllability, and tradability.”
The court acknowledged that “Chinese laws presently do not clearly state” the “legal attributes of NFT digital collections” and ruled that it was required to “affirm the legal qualities of the NFT digital collection” for the case.
The court’s ruling was presented in a case where two anonymous technology platform users sued the business after it refused to complete a sale and canceled their purchase of an NFT from a “flash sale” because the user’s identity and phone number were allegedly incorrect.
The sale in question is considered to be the “selling of digital goods through [the] internet,” which would be considered an e-commerce business and “regulated by the ‘E-commerce Law,'” according to the court. As a result, “NFT digital collections belong to the category of virtual property,” it said.
A joint statement issued in April by the China Banking Association, the China Internet Finance Association, and the Securities Association of China warned the public about the “hidden risks” of investing in NFTs. The government is still on guard to ensure that its populace does not engage in “NFT speculation.”