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The Chinese Court Says that NFTs are Protected by the Law as Virtual Property.

In a case where the court had to confirm the legal properties of NFTs, it said that NFTs are “unique digital assets” that “belong to the category of virtual property.”

A Chinese court in the city of Hangzhou said that collections of nonfungible tokens (NFTs) are online property that should be protected by Chinese law.

An article posted on November 29 by the Hangzhou Internet Court, a specialized internet court, and shared by crypto blogger Wu Blockchain on December 5 shows the favorable language for NFTs after the country started cracking down on cryptocurrencies in 2021, leaving NFTs in a legal gray area.

The article says that NFTs “have the object characteristics of property rights, such as value, scarcity, controllability, and tradeability,” and that they “belong to network virtual property” that “should be protected by the laws of our country.”

For a case, the court decided it was important to “confirm the legal attributes of the NFT digital collection,” and it admitted that “Chinese laws do not currently clearly state” what the “legal attributes of NFT digital collections” are.

In a case where the user of a technology platform and the company were not named, the user sued the company for not completing a sale and canceling their purchase of an NFT from a “flash sale” because the user gave a name and phone number that allegedly didn’t match their information. The court’s decree came out of that case.

The court said that “NFTs condense the original artistic expression of the creator and have the value of related intellectual property rights.” It also said that NFTs are “unique digital assets that are made on the blockchain based on the trust and consensus mechanism between blockchain nodes.”

Because of this, 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’.”

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.