China’s Supreme Procuratorate Issues Warning About NFTs and Their Crypto-Like Attributes | NFT CULTURE | NFT News | Web3 culture
In a recent development, China’s highest national prosecution agency, the Supreme People’s Procuratorate, has raised concerns about non-fungible tokens (NFTs) and their similarity to virtual assets, which are banned in the country. The agency published guidelines aimed at addressing the treatment of NFTs and emphasized the need for thorough risk assessment and appropriate punishment for related crimes.
The rise of NFTs in China
After China’s ban on cryptocurrency trading and related services in 2021, the local crypto industry largely disappeared. However, NFTs emerged as a new trend, becoming popular as digital collectibles that were considered different from high-risk cryptocurrencies. This resulted in an increase in NFT adoption in China.
Attributes and Risks of NFTs: The report released by the prosecution highlights the attributes of NFTs and the associated risks. While NFTs enable the attachment of unique digital identifiers to virtual or real objects, and provide proof of ownership through blockchain technology, the agency argues that true ownership and control of digital art remains problematic. NFTs can be replicated and distributed, limiting consumers’ ability to fully enjoy ownership rights.
The legitimacy of the right source of the work itself is the decisive factor for a healthy and orderly development of digital works NFT transactions.
Legal implications and consumer protection
From a legal perspective, the report clarifies that consumers do not have ownership of NFT digital assets they purchase in the traditional sense defined by civil law. In addition, consumers lack the ability to prohibit others from accessing, copying or disseminating the digital assets represented by NFTs. Instead, consumers have an exclusive right to prevent tampering with the ownership record on the blockchain.
China’s stance on blockchain technology: Despite China’s cautious approach to cryptocurrencies, the country recognizes the potential of blockchain technology, which forms the basis of virtual assets. The prosecution acknowledges that NFTs, as a new application of blockchain technology, have development potential. This suggests that China is interested in leveraging blockchain for national digital infrastructure projects.
Conclusion: China’s Supreme People’s Procuratorate has issued a warning regarding the characteristics of NFTs and their similarity to banned virtual assets. While NFTs have gained popularity in China as digital collectibles, their financial, managerial, network security and legal risks should not be overlooked. The report emphasizes the importance of comprehensive risk assessment and appropriate punishment for crimes related to NFT. Despite its reservations about cryptocurrencies, China recognizes the potential of blockchain technology, including its application in NFTs and national digital infrastructure.