China Outlaws NFT Theft, Recognizes Digital Collections

China has declared that stealing digital collections, including NFTs (nonfungible tokens), is a criminal offense. This decision marks a significant shift in the legal treatment of digital assets. The Chinese government’s statement, issued on November 10th, underlines a new understanding of digital collections as data and virtual property. This interpretation brings these assets under the umbrella of “co-offending” in criminal law.

Legal Recognition of Digital Collections as Property

The statement elaborates that theft of digital collections isn’t merely about unauthorized access since it involves intrusion into the system where these assets are housed. Hence, such actions will be considered theft and illegally obtaining computer information system data. This dual classification underscores the seriousness with which China views the protection of digital assets.

Significantly, the statement names digital collections as “network virtual property.” In criminal law, the recognition of collections as property is pivotal.

“Since property is the object of property crime, digital collections can become the object of property crime,” the statement reads.

This clarity is crucial, especially considering the technology-driven nature of these assets.

Implications for NFTs and Blockchain Technology

Moreover, the Chinese government specifically mentioned NFTs in its declaration. NFTs, a concept derived from abroad, use blockchain technology to map specific assets. Their unique, non-copyable, tamper-proof, and permanent storage characteristics make them particularly valuable and vulnerable to theft.

Additionally, the declaration highlights that despite China’s ban on crypto-related activities since 2021, there’s a growing interest in NFTs within the country. Recent developments, like the peer-to-peer marketplace Xianyu (owned by Alibaba), uncensored “nonfungible tokens” and “digital asset” keywords, and China Daily’s announcement to create its own NFT platform, indicate a burgeoning market for digital collections.

However, the statement clarifies that, currently, China has not opened a “secondary flow market” for these digital collections. Consumers can, though, rely on trading platforms for purchasing, collecting, transferring, or destroying these assets, ensuring exclusive possession and control.

This decision by the Chinese government is not just a legal precedent but also a bold step into the future of digital asset protection. Moreover, it reflects an evolving understanding of property in the digital age and sets a benchmark for other nations grappling with similar issues.

Read Also: China Daily Allocates $390,000 for New NFT Platform Development

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Kelvin is a distinguished writer specializing in crypto and finance, backed by a Bachelor’s in Actuarial Science. Recognized for incisive analysis and insightful content, he has an adept command of English and excels at thorough research and timely delivery.

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