A Hangzhou court has declared that collectible NFTs constitute online virtual property that must be protected by Chinese law.
Article released on November 29 by Hangzhou Internet Court, an expert Internet Court.
The favorable language for NFTs was disclosed on December 5 by crypto blogger Wu Blockchain. When China begins cracking down on cryptocurrencies in 2021, NFTs will be in a legal gray area.
The translated article states that NFTs “have commodity characteristics of property rights such as value, scarcity, controllability and tradability” and that “networks belong to virtual assets” that “should be protected by the laws of our country.”
The court decided a case needed to “confirm the legal characteristics of NFT digital collectibles,” and acknowledged that “Chinese law currently does not clearly set forth the legal characteristics of NFT digital collectibles.”
The court issued the ruling in a case where anonymous users of a technological platform sued the corporation for refusing to fulfill the sale of NFTs from a “flash sale” and for canceling NFT orders. Done because the individual purportedly provided a name and phone number that did not match their data.
“NFTs encapsulate the original expression of the creator’s art and hold the value of the associated intellectual property rights,” the court said. It states that NFTs are “unique digital assets formed on the blockchain based on a trust and consensus mechanism between blockchain nodes.”
Due to this, the court stated that “NFT digital collectibles belong to the category of virtual assets” and that the transaction is “viewed as the sale of digital goods” from a legal standpoint. Internet transactions would be treated as e-commerce transactions and governed by e-commerce law.
In May, the Shanghai High People’s Court issued a paper indicating that bitcoin (BTC) is equally subject to property rights rules and regulations, notwithstanding the country’s ban on cryptocurrencies.
China has separated NFTs from cryptocurrencies in order to facilitate the deployment of non-crypto NFTs purchased with fiat currency. According to a joint statement issued in April by the China Banking Association, the China Internet Finance Association, and the Securities Association of China, the government continues to warn its citizens against “NFT speculation,” which has exposed the “hidden risks” of investing. The public was cautioned regarding NFT.
China is not the only nation to include NFTs into its property laws. “NFTs have emerged as highly sought-after collectors’ items,” said a Singapore High Court judge in an October case on current property laws, comparing NFTs to tangible assets like fancy watches and excellent wine.
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