Chinese court says NFT is virtual property protected by law

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2022-12-07 21:27:41

A court in the city of Hangzhou said NFT collections are online virtual assets, which should be protected under Chinese law.

China gives more positive signal to NFT

In a dispute lawsuit filed in a Hangzhou court, a person sued the company for refusing to complete the sale and canceling their NFT purchase because the user provided a name and phone number. is said to not match their information.

“NFT condenses the original artistic expression of the creator and has value in relation to the related intellectual property rights. It added NFT as “the only digital asset formed on the blockchain based on a mechanism of trust and consensus among blockchain nodes,” the court said.

For this reason, the court said that “the NFT digital collection falls under the category of virtual property” and that the transaction in the legal action as “the sale of digital goods through the Internet” will be considered. is an electronic transaction, regulated under the commercial business law and governed by the E-commerce Law’.

NFTs have property rights characteristics such as value, scarcity, controllability, and tradability. Therefore, NFT inherently belongs to the online virtual asset class and should be protected by Chinese law. This will set a precedent in favor of the NFT especially after the country begins to impose strict restrictions on cryptocurrencies in 2021.

The court decided it was necessary to confirm the legal properties of the NFT digital collection for a lawsuit and acknowledged that Chinese law does not currently specify the legal properties of the digital collection clearly. NFT digital.

Earlier in May, the Shanghai High People’s Court issued a document claiming Bitcoin was subject to property rights laws and regulations despite the country’s cryptocurrency ban.

With the crypto ban, China decoupled NFTs from crypto with a government-backed blockchain project to support the implementation of fiat-settled non-crypto NFTs. The government remains cautious to insure people against “NFT speculation” as described in a joint statement in April between the China Banking Association, the China Internet Finance Association and the China Securities Association. Quoc has warned the public about the “potential risks” of investing in the NFT.

China is not the only jurisdiction that places the NFT under property law. A Singapore High Court judge drew on existing property law in a case in October, likening NFTs to physical assets such as luxury watches or fine wine, saying that “NFTs have emerged as a commodity. It is highly sought after by collectors.”

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