The Chinese government has recently announced strict regulations to combat the theft of digital collections, including non-fungible tokens (NFTs). Those caught stealing these valuable assets will face criminal penalties as per the government’s statement. The regulations also address related offenses such as hacking and data theft. These measures signify a notable milestone, considering that China had previously banned all crypto-related activities in late 2021.
NFTs as Online Virtual Property
The newly issued regulations acknowledge that NFTs and other digital collectibles can be deemed as online virtual property. This recognition stems from their unique codes, non-tamperable features, and detailed transaction information. By classifying digital collections as “network virtual property,” the Chinese government aims to protect the rights and interests associated with these assets.
“The theft of digital collections violates the protection law and interests of the crime of illegally obtaining computer information system data,” the Chinese government stated. “Since property is the object of property crime, digital collections can obviously become the object of property crime. If the digital collection is stolen by intrusion into the system or other technical means, the act also damages the property law.”
China, however, has not yet established a “secondary flow market” for these digital collections. Nonetheless, consumers can still engage in transactions on trading platforms to buy, collect, transfer, or dispose of these assets, ensuring exclusive ownership and control. It is crucial to note that throughout this year, China has witnessed a surge in civil disputes related to cryptocurrencies, leading to conflicting court rulings.
NFT Market Regulations
In May, Chinese prosecutors expressed their intention to crack down on what they termed “pseudo-innovations” in the country’s NFT market. Despite the ban, interest in NFTs continues to grow within China. In fact, China Daily, the country’s state-owned English-language newspaper, recently announced plans to launch its own metaverse and NFT platform next year. To facilitate this venture, China Daily has offered a substantial sum of 2.8 million Chinese yuan (approximately $384 million) to a third-party contractor, whether Chinese or foreign, capable of developing its Zhongbao Shuzang NFT issuance platform within three months.
