According to the Hangzhou Internet Court in China, NFTs are unique digital assets belonging to the virtual property category and should be protected by law.
The court’s ruling on NFT was delivered in a case where two anonymous Hangzhou-based digital art platform users sued the platform after it refused to complete a sale and canceled their purchase of an NFT.
The platform then refunded the money from the flash sale because the user’s KYC information was allegedly inaccurate.
The Hangzhou-based firm had the right to end the NFT sales contract, the court decided, rejecting the plaintiff’s argument.
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The Chinese court stated, “The sale contract of the NFT does not violate the Chinese laws, nor does it violate regulatory guidance in China to prevent financial risks, so Chinese laws should protect it.”
The Hangzhou court stated that NFT collectibles, as virtual artwork, condense the creator’s creative expression of art and have the value of relevant intellectual property rights.
The court added “NFT is a unique digital asset on the blockchain based on trust and consensus mechanisms among blockchain nodes. Therefore, NFT falls into the category of virtual property.”
The transaction in the legal dispute is viewed as the selling of digital goods through the internet, and the digital art-based platform is handled as an e-commerce firm and regulated under the e-commerce Law, the court stated.
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