A Chinese court in the city of Hangzhou has stated that nonfungible token collections are online virtual property that should be protected under Chinese law.
An article posted by the Hangzhou Internet Court shared by crypto blogger Wu Blockchain on Dec. 5 reveals the favorable language for NFTs after the country began to crack down on cryptocurrencies in 2021, leaving NFTs in a legal grey area.
The article says NFTs have the object characteristics of property rights such as value, scarcity, controllability, and tradability and belong to network virtual property.
The court decided it necessary to confirm the legal attributes of the NFT digital collection for a case, and admitted Chinese laws currently do not clearly stipulate the legal attributes of NFT digital collections.
The decree by the court was brought forward in a case where the user of a technology platform, both unnamed, sued the company for refusing to complete a sale and cancelling their purchase of an NFT from a flash sale because the user provided a name and phone number that allegedly didn’t match their information.
With its crypto ban, China has worked to separate NFTs from crypto with a government-backed blockchain project to support the deployment of non-crypto NFTs paid for with fiat money.
The government is still watchful to ensure its population resists NFT speculation as described in an April joint statement between the China Banking Association, the China Internet Finance Association and the Securities Association of China that warned the public about the hidden risks of investing in NFTs.
