Non-fungible tokens (NFTs) are now recognised as virtual property under Chinese law, according to an Hangzhou court decision. This decision was made in a case where there was a disagreement between a consumer and a platform engaged in selling a group of tokens.
According to the Court, NFT collections contain “unique properties of network virtual property” and attributes of property rights, including value, scarcity, controllability, and readability.
As stated by the Court,
“Our laws should protect the contract at issue since it does not break either the rules and regulations of our nation or the real policy and regulatory direction of our nation to reduce economic and financial risks.”
The Court also stated, “This means that, under normal sales contracts, NFT digital collections fall under the category of virtual property, which is distinct from tangible or intangible goods.”
In addition to being digital assets made on the blockchain, the NFTs also display the author’s artistic expression and carry the value of associated intellectual property rights.
However, the Court also stated that Chinese law “now does not explicitly specify them” concerning the legal characteristics of NFT collections.
However, the Court argued that transactions in these circumstances are equivalent to online sales of digital products and, as such, are e-commerce operations covered by China’s E-commerce Law.
Wang v. Company
According to the statement, the defendant in the lawsuit is a digital business with headquarters in Hangzhou that runs an online store that specialises in the selling of digital artwork. The platform user, known by the alias Wang, was on the opposing side of this legal dispute from the plaintiff.
The platform’s cancellation of a purchase of an NFT collection, which Wang said was done without his permission, is what sparked the case.
The business said in February that it would sell an “NFT digital collection blind box” in a small number of units. Additionally, it was stated that when making a purchase, a mobile phone number “consistent with the real-name authentication must be filled in”.
And that any orders deemed invalid due to incorrect personal information, real-name authentication not being used, etc., would have their purchases refunded.
Wang stated that after entering his personal information and paying 999 yuan ($143) for one of these boxes, the firm never delivered it and instead gave him his money back after ten days. Therefore, he demanded that the contract be honoured or that compensation in the amount of 99,999 ($14,325) be given.
Meanwhile, the business issued a refund because Wang gave an incorrect mobile phone number and ID number when submitting the transaction. The deal had not yet been finalised, according to the firm.
In addition, even if it had, the agreement would have been cancelled since the buyer had given false information; therefore, it had not yet been. Last but not least, since the digital box was already sold, it would be difficult to give it to Wang after the case.