China has officially declared that the misappropriation of digital collections, including nonfungible tokens (NFTs), will be legally treated as property theft, signaling a noteworthy shift in the nation’s approach to regulating digital assets.

On November 10, the Chinese government issued a significant statement regarding the legal status of digital collections, such as NFTs, within its jurisdiction. This announcement reflects a notable stance on digital property rights and cybercrime in a country recognized for its stringent regulatory framework.

The statement presented three perspectives on classifying the misappropriation of digital collections. The initial two viewpoints categorize it as either data theft or theft of digital property. However, it is the third perspective that treats digital collections as both data and virtual property, falling under the concept of “co-offending.”

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According to the statement, “The theft of digital assets violates the protection law and interests of the crime of illegally obtaining computer information system data.”

This approach underscores the multifaceted nature of digital asset misappropriation, involving unauthorized access to computer systems and the theft of virtual property.

Highlighting the dual nature of such misappropriation, the statement clarifies that stealing a digital collection involves unlawfully accessing the system hosting it, thus constituting a violation of laws protecting computer system data and property rights.

China Designates Digital Collections as ‘Network Virtual Property’ in Criminal Context Amid Growing NFT Interest

The Chinese government designates digital collections as “network virtual property,” affirming their recognition as property in a criminal law context. This classification is crucial, suggesting that digital collections can be subject to property crimes.

Despite China’s 2021 prohibition on most cryptocurrency-related activities, there are indications of a growing interest in NFTs within the country.

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 establish its own NFT platform, allocating 2.813 million yuan, or $390,000, for its design and implementation.

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