A Chinese court in Hangzhou has said that non-fungible token (NFT) pools are virtual online property that must be protected under Chinese law.
An article published Nov. 29 by the Hangzhou Internet Court — a specialized internet court — shared on Dec. 5 by crypto blogger Wu Blockchain revealed the language of choice for NFTs after the country began cracking down on cryptocurrencies in 2021, making NFTs in legal status. gray area.
The translated article says that NFTs “have property rights object properties such as value, scarcity, controllability, and tradability” and “belong to the virtual property of the network” that “must be protected by the laws of our country.”
The court decided that it was necessary to “confirm the legal attributes of digital NFT pools” for a case and acknowledged that “currently Chinese laws do not clearly provide” for the “legal features of digital NFT pools.”
The court order was introduced in a case where an unnamed tech platform user sued the company for refusing to complete a sale and rescinding its purchase of NFT from a “quick sale” because the user provided a name and phone number that allegedly did not match their information.
“NFTs intensify the creator’s original expression of art and have the value of related intellectual property rights,” the court said. She added that NFTs are “unique digital assets formed on the blockchain based on the mechanism of trust and consensus between blockchain nodes.”
For this reason, the court said, “digital NFT clusters belong to the category of virtual property” and the transaction in the legal case is seen as “the sale of digital goods over the Internet,” which would be treated as an e-commerce business and “regulated by the Electronic Commerce Act.” .
This comes after the Shanghai Higher People’s Court issued a document in May stating that bitcoin is a currency
Likewise subject to property rights laws and regulations though the country bans cryptocurrencies.
Related: Can Hong Kong Really Become China’s Crypto Agent?
By banning crypto, China has worked to decouple NFTs from crypto with a government-backed blockchain project to support the deployment of non-crypto NFTs paid with fiat money.
The government remains vigilant to ensure its residents resist “NFT speculation” as indicated in a joint statement issued in April between the China Banking Association, China Internet Finance Association and China Securities Association that warned the public of the “hidden risks” of investing in NFTs.
China is not the only jurisdiction that places NFTs under property laws. A Singaporean High Court judge drew on existing property laws in an October case likening NFTs to physical possessions such as a luxury watch or fine wine, saying, “NFTs have emerged as a much-sought collector’s item.”