Chinese prosecutors have warned that collections of NFTs (non-fungible tokens) share “attributes of cryptocurrencies” banned in the country.
The People’s Republic of China’s Supreme People’s Procuratorate issued guidelines on handling NFTs on May 15, recommending strengthening “risk investigation and judgment” and “accurately punishing crimes.”
After China cracked down on domestic cryptocurrency trading in 2021 and stopped banks from providing crypto-related services, the entire domestic industry disappeared. Since its inception, NFTs have not received the same treatment as risky crypto assets until they started gaining popularity in China as “digital collections.” But the prosecution’s new guidelines warn otherwise.
“Despite its popularity, it is highly likely to pose financial, operational, network security, and especially legal risks. Prosecutors are paying close attention,” the guidelines said.
NFTs allow virtual or real goods to have a unique digital identifier and proof of ownership recorded on the blockchain. Chinese prosecutors have argued that owners cannot really “enjoy” ownership, especially when it comes to digital art that can be reproduced and distributed.
“From a property rights perspective, consumers cannot enjoy ownership rights in the civil law sense of digital assets they purchase, NFTs, and cannot allow others to access, copy, or distribute digital assets mapped by NFTs. You can’t ban it,” said one of the report’s authors. “Consumers only enjoy an exclusive right to prevent others from tampering with the ownership of NFTs recorded on the blockchain.”
China, which has an aversion to cryptoassets, is looking to leverage its underlying blockchain technology to build a national digital infrastructure.
Chinese prosecutors say that NFTs have a certain degree of development potential as new applications of blockchain technology.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Original: China’s Top Prosecution Agency Says Although Not Banned NFTs Have Crypto-Like Attributes