Chinese court says NFTs should be protected by property laws
A Chinese court has found that NFTs share properties of property such as value, scarcity, disposability and marketability. It says as NFTs and digital collectibles should has the same protection as physical property under Chinese law.
NFTs or ‘non-fungible tokens’ caught the attention of the crypto industry and even the mainstream media during their meteoric rise in popularity in 2021. However, throughout much of 2022, floor prices and trading volumes for these digital collectibles have collapsed.
However, as BeInCrypto reported, trading volumes for the top NFT collections increased in November despite the turmoil in the broader crypto market caused by FTX’s fall.
China, directly or indirectly, probably played a role in this.
NFTs protected as property
The Hangzhou Court of China pointed out that digital NFT collections have characteristics such as value, scarcity, controllability and tradability and belong to the category of online virtual property. A local report highlighted this development:
“The contract involved does not violate China’s laws and regulations, nor does it violate the realistic policy and regulatory orientation of China’s national defense economic and financial risks, and should be protected by Chinese law.”
This announcement follows a recent court case in Hangzhou regarding a property rights dispute between an NFT platform and a user.
Different in China
The creation and management of NFTs is different from the rest of the world. The majority are considered “digital collectibles” rather than “tokens”. This emphasizes their status as non-tradable and non-currency.
They are designed to appease regulators who oppose trading and speculation. China’s state news agency even released several digital collectibles last year.
A difficult part of regulating the sector is that much of it is plagued with fraud and bad actors. Last April, a court in China’s eastern city of Hangzhou handed down the country’s first landmark ruling in a case involving NFTs. The ruling made marketplaces liable for users who create non-fungible tokens from stolen artwork.
Meanwhile, Chinese social media giant Tencent Holdings shut down the Huanhe nonfungible token platform after just one year of operation. The move comes as regulatory scrutiny of NFTs increases in the country.
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