While China appears to be encouraging NFT ownership, NFT prices have declined in line with the broader market.
A Chinese court in the city of Hangzhou applied Its property law for non-fungible tokens (nft) collection. The court ruled that NFTs are like online virtual property and should be protected under Chinese law.
While Chinese laws are unclear on the characteristics of NFTs, the court has taken steps to establish their legal characteristics. According to the case report, “NFTs have commodity characteristics of property rights such as value, scarcity, controllability and traceability”. Thus, the court confirmed that they were like virtual assets of a network.
The need to define the legal characteristics came about as part of a developing legal case where an unmanned user of a technology platform sued the company to prevent a sale because the user had provided false information. Consequently, while defining NFTs as a virtual property asset, the court noted that its sale would be treated as e-commerce and would be regulated by the “e-commerce law”.
Implications of China’s Stand on NFTs
In-spite of this ban cryptoChina seems to have taken a soft stance on NFTS. Earlier in the year, the government began construction of significant blockchain infrastructure This will allow NFTs to be developed that can be bought directly with fiat.
However, the Chinese government also issued an advisory warning about the hidden risks of investing in NFTs as speculative assets. By treating them as assets rather than tokens, NFTs have non-currency status in China.
nft trading volume still down
While China appears to be encouraging NFT ownership, NFT prices have declined in line with the broader market. From a peak of $17 billion in early 2022, the NFT market is set to fall to $470 million in September 2022.
Data from DappRadar shows that trading volumes declined further in November, with most transactions taking place in secondary markets. Interestingly, the top NFT collectibles have seen an increase in trading volume. For example, the Bored Ape Yacht Club sold for approximately $63.8 million.
There is speculation that China may have played a role in this either directly or indirectly. However, this is not clear. A Singapore High Court judge also upheld the property law on NFTs in October, which is clear that China’s stance on NFTs as property could help spur people to buy more NFTs.
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