A court in the Chinese city of Hangzhou has determined that non-fungible tokens, or NFTs, represent virtual property protected by the laws of the People’s Republic. The decision stems from a case involving a dispute between a client and a platform contracted to sell a collection of tokens.
Hangzhou Internet Court Hears Case Involving Property Rights in NFTs
A court in Hangzhou, the capital of eastern China’s Zhejiang province, has heard a dispute between a client and a local digital art platform that canceled an NFT sale on its behalf. The user sued the company claiming that the operation was terminated without their consent.
The platform, which issued a refund, explained that its decision was linked to the inaccurate personal information it had received from the complainant. According to its know-your-customer procedures, orders placed without real-name authentication must be canceled, a announcement detailed.
The Hangzhou Internet Court said that NFT collections have the characteristics of property rights such as value, scarcity, controllability and negotiability, while digital collectibles are virtual properties. In the statement, cited by Chinese crypto-journalist Colin Wu, also known as “Wu Blockchain” on Twitter, the judicial authority also pointed out:
The contract involved in the case does not violate the laws and regulations of our country, nor the current policy and regulatory guidelines aimed at preventing economic and financial risks, and must be protected by law.
The court further clarified that “As a virtual work of art, an NFT digital collection itself condenses the original artistic expression of the creator and has the value of related intellectual property rights. At the same time, NFT digital collections are unique digital assets formed on the blockchain based on the mechanism of trust and consensus between blockchain nodes.
Therefore, the Hangzhou court concluded that the NFT collections belong to the category of virtual goods. He also expressed his position that the transaction in the case represents the commercial activity of selling digital goods via the Internet, therefore it belongs to e-commerce activities and should be regulated as such under the “Law on e-commerce” of China.
Last year, the Chinese government launched a nationwide crackdown on crypto-related activities such as the issuance, trading, and mining of digital coins such as bitcoin. While allowing NFTs to be issued, regulators have tried to curb speculation with them. To avoid associations with the crypto space, they are often referred to as “digital collectibles” rather than “non-fungible tokens”.
In April this year, reports surfaced that the popular Chinese messaging app Wechat is suspend accounts related to NFTs. And in September, it was learned 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? Share your thoughts on the subject in the comments section below.
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