Hangzhou Court of China: NFT digital collections should be protected by Chinese laws

Recently, the Hangzhou Internet Court heard an information network sales contract dispute case caused by the transaction of NFT digital collections.

The Hangzhou Court of China pointed out that Chinese laws should protect NFT digital collections

The defendant, a digital technology company in Hangzhou, operates an e-commerce platform specializing in selling digital artworks, and the plaintiff, Wang, is a user of the platform.

This company issued a rush purchase announcement in February of this year through the abovementioned platform, saying that an “NFT digital collection blind box” would be sold in limited quantities. The announcement recorded the sale details, such as price, snap-up time, limited purchase quantity, etc., and attached the QR code of the purchase channel. At the bottom of the announcement, it is prompted that the mobile phone number consistent with the real-name authentication must be filled in when snapping, and a mobile phone number can only snap up one copy. The platform will eliminate invalid orders without real-name authentication, wrong personal information, etc., and will force refunds for invalid orders.

After the trial, the court held that the transaction objects involved were NFT digital collections, not NFT equity certificates. The special feature of this case is that the subject matter of the transaction between the two parties is an NFT digital collection, so it is necessary to confirm the legal attributes of the NFT digital collection first.

It should be pointed out that when the NFT digital collection operator makes the contract termination agreement through the standard clauses, it is not justified, and it is not feasible for the user to request continued performance or bear the cost of a third party’s alternative performance.

At the same time, since NFT digital collection transactions rely on blockchain technology and smart contract technology, the time, price, and buyer and seller information of each transaction can be traced and cannot be tampered with. Every transaction of each NFT digital collection has According to available information, calculating the breach of contract loss in NFT digital collection transactions is more intuitive, accurate, convenient and efficient than the breach of contract loss in general sales contracts.

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