China declares stealing digital collections like NFTs liable for criminal theft sentence

The Chinese government released a statement on Nov. 10 declaring that anyone stealing digital collections, such as nonfungible tokens (NFTs), will be subject to theft sentences.

It outlines three views on the type of crime that theft of digital collections falls under, the first two classifying it as either data or digital property. However, the statement stresses the third view which sees digital collections as both data and virtual property that would fall under the umbrella of “co-offending.”

The statement explained that stealing a digital collection includes intrusion into the system on which it is housed, therefore also committing the crime of illegally obtaining computer information system data and theft.

“The theft of digital collections violates the protection law and interests of the crime of illegally obtaining computer information system data.”

It elaborates on this topic, naming digital collections “network virtual property” and stressing that in the criminal law context, “collections should be recognized as property.”

“Since property is the object of property crime, digital collections can obviously become the object of property crime. If the digital collection is stolen by intrusion into the system or other technical means, the act also damages the property law.”

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NFTs were specifically mentioned, establishing that digital collections are derived from the concept of NFTs “abroad” and use blockchain technology to “map specific assets” with “unique, non-copyable, tamper-preventing, and permanent storage characteristics.”

The declaration said that although China has not opened the “secondary flow market” for digital collections “consumers can rely on trading platforms to complete purchases, collections, transfers, destruction and other operations to achieve exclusive possession, use, and disposal capabilities.”

Despite China’s official ban from 2021 on nearly all crypto-related activity and transactions other than simply owning cryptocurrencies, there has been recent buzz surrounding NFTs.

A local Chinese media reported on Oct. 25 that the Alibaba-owned peer-to-peer marketplace Xianyu removed its censorship of “nonfungible tokens” and “digital asset” related keywords in its search.

Prior to that, on Oct. 6 China Daily, an English-language newspaper owned by the Chinese government, announced that it wanted to create its own NFT platform and would award 2.813 million Chinese yuan ($390,000) to a third-party contractor to design the platform up to its specifications.

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