China Officially Recognizes Theft of Digital Collections, Including NFTs, as Property Theft in Landmark Legal Shift

The Chinese government has formally recognized the theft of digital collections, such as Non-Fungible Tokens (NFTs), as equivalent to property theft. This marks a considerable change in the country’s approach to digital asset regulation.

On November 10, China made an important announcement regarding the legal treatment of digital collections, including NFTs. This declaration represents a significant shift in the nation’s stance on digital property rights and cybercrime, given its traditionally strict regulatory framework.

Three perspectives are outlined in the statement for categorizing digital collection theft. The first two perspectives view it as either data theft or digital property theft. The third perspective, which treats digital collections as both data and virtual property, leads to a concept known as “co-offending.”

According to the statement, “The theft of digital collections violates the protection law and interests of the crime of illegally obtaining computer information system data.” This statement highlights the complex nature of digital asset theft, encompassing both unauthorized access to computer systems and the theft of virtual property. It emphasizes that stealing a digital collection not only involves illicit access to the hosting system but also breaches laws protecting data and property rights in computer systems.

The Chinese government has categorized digital collections as “network virtual property,” recognizing them as property in a criminal law context. This is crucial as it means digital collections can be subjected to property crimes.

NFTs, mainly developed outside China, use blockchain technology to create unique, non-replicable digital assets with secure and permanent storage. Despite China’s 2021 ban on most cryptocurrency activities, these recent developments suggest a more nuanced stance towards digital assets like NFTs.

There are signs of growing interest in NFTs in China. For instance, Alibaba’s Xianyu lifted restrictions on the search terms “nonfungible tokens” and “digital asset” on October 25. Moreover, on October 6, the state-run China Daily revealed plans to develop its own NFT platform, allocating 2.813 million yuan (about $390,000) for its design and implementation.

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