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China Court Recognizes NFTs As Virtual Property

Court in China Recognizes NFTs as Virtual Property Protected by Law

A court in Hangzhou, China, has ruled that non-fungible tokens (or NFTs) are virtual property under the People’s Republic laws. This ruling is based on a dispute between a customer, and a platform that was hired to sell tokens.

Hangzhou Internet Court Hearing Case Concerning Property Rights over NFTs

A court in Hangzhou (the capital of Zhejiang province in eastern China) has heard a dispute between a client of a digital art platform and a local customer. The platform had cancelled a sale of NFTs for the client. The user sued the company, claiming that the operation was ended without his consent.

The platform issued a refund because of the inaccurate information it received about the plaintiff. According to its know-your-customer procedures, orders placed without real-name authentication should be canceled, an announcement detailed.

The Hangzhou Internet Court stated that NFT collections have the characteristics of property rights, such as value and scarcity, controllability and tradability. However, digital collectibles can only be described as virtual properties. In the statement, quoted by Chinese crypto journalist Colin Wu, also known as ‘Wu Blockchain’ on Twitter, the judicial authority also emphasized:

The contract involved in the case does not violate the laws and regulations of our country, nor does it violate the actual policy and regulatory guidance to prevent economic and financial risks, and should be protected by the law.

The court stated that NFT digital collections are unique digital assets formed on the blockchain based on the trust and consensus mechanism between blockchain nodes. NFT digital collections, which are digital assets created on the blockchain using the trust and consensus mechanism among blockchain nodes , are also unique digital assets.

The Hangzhou court concluded that NFT collections are part of the category virtual property. It stated that the transaction in this case is a business activity that involves selling digital goods via the internet. Accordingly, it should be regulated under China’s E-commerce Law .”

The Chinese government launched a crackdown last year on cryptocurrency-related activities such as the issuance, trading and mining of bitcoins. While NFTs were allowed to be issued by regulators, they were also intended to limit speculation. They are sometimes called “digital collectibles” to avoid being associated with the crypto-space.

In April of this year, reports revealed that the popular Chinese messaging app Wechat is suspending accounts linked to NFTs. And in September, it became known that the National Copyright Administration of China (NCAC) had launched a campaign to crack down on copyright infringement and piracy through digital collectibles.

What future do you expect for NFTs in China? Please share your views on this topic in the comments section below.

Lubomir Tassev



Image Credits: Shutterstock, Pixabay, Wiki Commons

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