The Hangzhou court has said that a new type of virtual property called nonfungible tokens, or NFTs, should be protected under Chinese law.
NFTs have the object characteristics of property rights such as value, scarcity, controllability and tradability. They also belong to virtual networks that should be protected by the laws available in our country.
In a recent case, the court had to “confirm the legal attributes of an NFT digital collection” for a case and admitted “Chinese laws currently do not clearly stipulate” the “legal attributes of NFT digital collections.”
When a person purchases an NFT from a “flash sale,” they need to provide the company with their name and phone number. However, it’s not always easy to know if your information matches up with what you enter–especially if you try to use an alias. If this is the case, the seller of that item should still be able to complete the sale.
NFTs are similar to normal securities in that they can represent property rights related to an underlying asset, like artwork. They differ, though, because they exist entirely on the blockchain. NFTs are unique digital assets formed on the blockchain by using the trust and consensus mechanism based between blockchain nodes.
As a result, the court said that “NFT digital collections belong to the category of virtual property” and a transaction in the legal case is seen as “selling digital goods through [the] internet,” which would be treated as e-commerce and regulated by the “E-commerce Law.”
China’s top court has declared that bitcoin is subject to property rights laws and regulations, despite China’s ban on cryptocurrencies.
Recently, China has unilaterally banned crypto alongside NFTs. To circumvent the ban, they have created a government-backed project to support the deployment of non-crypto NFTs. They are also paying for them with fiat money.
The government is continuing to take “NFT speculation” seriously, as described in a joint statement from the China Banking Association (CBA), the China Internet Finance Association (CIFA) and the Securities Association of China (SAC), which warned the public about the “hidden risks” of investing in NFTs.
The owner of a casino in Singapore recently argued that NFTs are basically a luxury item and should be protected under the law with the same rights as any other type of property. In an October 2016 case, he provided an argument for why these would be considered like any other type of physical property such as high-end watches or fine wine.
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