Court in China Determines That NFTs Represent Virtual Property and Are Protected by Law
Though a court in China ruled against the claims made by a non-fungible token (NFT) buyer, it found that these tokens are virtual property protected by law.
The ruling was reached by a court in the city of Hangzhou, the capital of the Chinese province of Zhejiang, in a case that involved a contract dispute regarding an NFT collection sale, said the statement by the court published on Tuesday last week.
The court stated that NFT collections have the characteristics of property rights such as value, scarcity, controllability, and readability, while also possessing "unique attributes of network virtual property."
According to the court,
"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 of our country to prevent economic and financial risks, and should be protected by the law of our country."
The NFTs bear the creator's artistic expression and have the value of related intellectual property rights, it added, while also being digital assets created on the blockchain.
"Therefore, NFT digital collections belong to the category of virtual property [...] different from tangible or intangible objects in general sales contracts," it stated. "NFT collections, a new type of online virtual property, should be protected by the laws of our country as the object of transactions between the two parties."
The court also noted, however, that when it comes to legal attributes of NFT collections, Chinese law "currently does not clearly stipulate them."
That said, transactions in these types of cases are equal to selling digital goods online, and as such, they are e-commerce activities - regulated by China’s E-commerce Law, the court argued.
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