The Supreme People’s Procuratorate of the People’s Republic of China, the country’s highest national agency, released guidelines regarding the treatment of Non-Fungible Tokens (NFTs) in the country, warning that NFT trading poses innumerable risks. According to the commentary issued on Monday, the authority has recommended a serious “risk research and judgment” as well as to “accurately punish crimes”.
The report stated that the NFTs in the country’s market aren’t created on blockchains, adding:
While it has high popularity, it is very likely to cause financial risks, management risks, network security risks, etc., especially legal risks. Prosecutors are paying close attention.
As per the document, the owners of the non-fungible tokens couldn’t “enjoy” their ownership as the NFTs have a unique digital identifier that records the proof of ownership on the blockchain. The ownership of NFTs could be replicated and distributed; NFTs do not hold a fixed owner.
The report read:
Consumers do not enjoy the ownership of the NFT digital assets they purchase in the sense of civil law, and consumers cannot prohibit others from accessing, copying or disseminating the digital assets mapped by NFT. What consumers enjoy is only an exclusive right to prohibit others from tampering with the ownership of the NFT recorded on the blockchain.
The report indicates the country’s interest in expanding stringent regulations on NFTs, countering the repeated complaints China received on non-fungible tokens. On March 14, the State Administration for Market Regulation reported that the agency received more than 59,000 complaints against NFTs in 2022.
Though the agency reiterated that the NFTs resemble the “attributes of the virtual assets”, which have been previously banned in the country, it also acknowledged the potential of the tokens, indicating the country’s enthusiasm for harnessing blockchain technology.
