Court in China Recognizes NFTs as Virtual Property Protected by Law – A court in Hangzhou, the provincial capital of Zhejiang in eastern China, has reviewed a dispute between a customer and a local digital art platform that canceled a sale of NFTs on his behalf. The user filed a lawsuit against the business, alleging the operation was ended without his consent.
The platform, which offered a refund, explained that its decision was due to the plaintiff’s inaccurate personal information. An announcement specified that, according to its know-your-customer policies, orders placed without real-name authentication must be canceled.
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The Hangzhou Internet Court said that NFT collections bear the characteristics of property rights such as value, scarcity, controllability, and tradability while the digital collectibles are 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 further elaborated that “as a virtual artwork, an NFT digital collection itself condenses the creator’s original expression of art 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 trust and consensus mechanism between blockchain nodes.”
Therefore, the court in Hangzhou determined that NFT collections fall within the category of virtual property. It further asserted that the transaction in question constitutes the economic activity of selling digital goods via the internet and, as such, falls within China’s “E-commerce Law”
The Chinese government initiated a broad crackdown on crypto-related activity, including the issuing, trading, and mining of digital currency like bitcoin, last year. While permitting NFTs to be issued, regulators attempted to limit NFT speculation. They are frequently referred to as “digital collectibles” as opposed to “non-fungible tokens” to avoid links with the crypto space.
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In April of this year, it was reported that the popular Chinese messaging platform Wechat is suspending accounts associated with non-fungible tokens (NFTs). In September, it was revealed that the National Copyright Administration of China (NCAC) has initiated a campaign to combat copyright violations and digital collectible piracy.
