NFT regulation – A Chinese court in Hangzhou has routed for a nonfungible token, saying collections are online virtual property that should be protected under Chinese law.
This was contained in an article posted by the Hangzhou internet court last month.
NFTs according to a translated article have the object characteristics of property rights such as value, scarcity, controllability, and traceability, as well as belonging to network virtual property that should be protected by laws of the Chinese government.
The court decided it was necessary to confirm the legal attributes of NFT digital collections.
The decree by the court was brought forward in a case where the user of a technology platform, both unnamed, sued the company for refusing to complete a sale and canceling their purchase of an NFT from a flash sale because the user provided a name and a phone number that allegedly didn’t match their information.
NFTs condense the creator’s original expression of art and have the value of related intellectual property rights, the court said. It added NFTs are unique digital assets formed on the blockchain based on the trust and consensus mechanism between blockchain nodes.
Given this reason for NFT regulation, the court said, “NFT digital collections belong to the category of virtual property” and the transaction in the legal case is seen as the “selling of digital goods through the internet,” which would be treated as an e-commerce business and “regulated by the E-commerce Law.”
It comes after the Shanghai High People’s Court issued a document in May that stated Bitcoin is similarly subjected to property rights laws and regulations despite the country’s ban on crypto assets.
With its crypto ban, China has worked to separate NFTs from crypto with a government-backed blockchain project to support the deployment of non-crypto NFTs paid for with fiat money.
The government is still vigilant to ensure its population resists “NFT speculation” as described in an April joint statement between the China Banking Association and the Securities Association of China that warned the public about the hidden risks of investing in NFTs.
China isn’t the only country to place NFTs under property laws. A Singaporean High Court judge drew on existing property laws in an October case likening NFTs to physical property such as luxury watches or fine wine saying “NFTs have emerged as a highly sought-after collector’s item.”
