A new article issued by the Supreme People's Procuratorate: How is the legal attribute of NFT set?

Today, the upsurge of digital collections or NFTs has almost passed, but the legal characterization of digital collections can only be concluded at this time, and related judgments have increased a lot this year. Only after the big waves receded did the real gold of theory glisten in the sand. In this context, on May 15 this year, the Supreme People's Procuratorate of the People's Republic of China published an opinion article on its official website titled "The Legal Attributes and Risk Governance of "NFT" in the Background of the Digital Economy". Practitioners in the digital collection industry and even practitioners in the metaverse, virtual assets, and Web3 industries pay attention**, and may even directly affect the legal nature or regulatory trends of related industries in the future. Today's article by Sister Sa's team will introduce the key points in the article.

Grasp the boundary between innovation and development and crime

The article affirms that the core value of digital collections lies in the capitalization of digital content. As an emerging industry, its prospects in protecting intellectual property rights, promoting the development of cultural and creative undertakings, and enriching the digital economy are widely optimistic. But at the same time, due to the nature of its own virtual assets, its blind and disorderly development is extremely easy to cause multiple risks such as illegal fundraising, fraud, and malicious speculation. Not only because of the disorderly development of the industry itself has led to many financial tendencies, but also its large-scale hype has made it a "criminal tool".

Specifically, on the one hand, there is a risk of fraud involved in the act of "fake chaining". For digital collections, blockchain technology is the fundamental technical guarantee of their value. Only digital collections that are on the chain can achieve the effect of "confirming the rights and ensuring that the unique digital certificate of the collection is not tampered with". This is why many consumers Important reasons to buy digital collections. Once this foundation disappears, once a digital collection platform is falsely uploaded to the chain, then this behavior is obviously an act of deceiving consumers, ranging from suspected false propaganda to serious crimes of fraud. On the other hand, there is a risk of pyramid schemes in "rebates for newcomers". The transaction characteristics of the blockchain smart contract itself can enable the relevant participants to obtain commissions, and once a certain amount of new rewards is set on this basis, it is extremely easy to evolve into an illegal pyramid scheme, which is suspected of organizing and leading pyramid schemes crime. In addition, "committed income" has the risk of illegal fundraising. Equity empowerment is a common mode of digital collections, and improper equity empowerment is extremely easy to constitute a lure, so that the behavior may be in line with the illegality, openness, sociality, and lure of illegal fundraising at the same time, and it may be suspected of illegal fundraising.

Therefore, for entrepreneurs involved in blockchain technology, the above three risks are worthy of vigilance. It is necessary to strictly control legal risks, do a good job in compliance, and not confuse innovation and development with crimes.

The legality of the source of the work itself is the most important thing

In a typical initial offering scenario of a digital collection transaction, four types of rights subjects are involved, namely, copyright owner, creator, platform, and buyer. Among them, the identity of the copyright owner may coincide with that of the creator, and the identity of the creator may coincide with the identity of the platform. When the identities of the copyright owner and the creator do not overlap, it is clear that the importance of the legitimacy of the source of rights of the work itself can be realized. highlight.

In other words, once the caster has not obtained the legal authorization of the copyright owner, the act of casting the original work and uploading it to the platform for distribution of digital collections clearly infringes the copyright of the copyright owner, and thus should bear the tort liability. Furthermore, it is necessary to impose certain review obligations on the platform to verify whether the minter is authorized. This verification method often rests on the fact that the creator needs to provide relevant copyright certification documents to prove the copyright status of the digital work and the legitimacy of the source of rights. But the problem is that, on the one hand, the documents provided can be falsified, thus infringing the copyrights of others; The review of documents obviously burdens the platform with excessive review costs, which may greatly affect the efficiency of transactions, which is not conducive to the development of the industry.

Therefore, the solution to the aforementioned problems of course requires the efforts of the platform side, the integrity of the foundry side, the intervention of public power and the support of legislation, which will require adjustments by relevant departments in the future.

In fact, the above-mentioned problems not only exist in the field of digital collections, but also in many AIGC fields that are currently booming. At any time, entrepreneurs should be vigilant about the legitimacy of the source of rights itself to prevent infringements.

Transactions in virtual currency are prohibited

The article also emphasized that "prohibiting transactions in encrypted currency is an important guarantee for restoring the normal market price of digital works and resolving potential legal risks." At the same time, it pointed out that the price of virtual currency itself fluctuates greatly, which will cause many problems and easily form information The asymmetry has damaged the interests of a large number of consumers, and there are a lot of risks of money laundering, fraud and illegal capital flow in transactions using virtual currency. Therefore, there are various risks and difficulties in using virtual currency as a means of transaction.

In fact, virtual currency itself does not have the attributes of legal currency and cannot be circulated in the market as legal currency. This is my country's long-term regulatory policy on virtual currency. It is foreseeable that this kind of regulatory policy will continue to be adhered to in the future, which reminds all entrepreneurs that at this stage, virtual currency must not be used in business models for transactions.

Four

Distinguish property rights to NFT from

Rights to digital assets mapped by NFT

At present, there is almost a consensus in China that consumers’ rights to NFT digital assets are obviously not a kind of ownership, because NFT digital assets themselves do not meet the definition of objects in the Civil Code, so the rights enjoyed by consumers are naturally Impossible is ownership.

Then, whether consumers have a property right to the NFT digital asset needs to be determined on a case-by-case basis. The article pointed out that the key lies in whether consumers enjoy de facto exclusivity to the NFT digital asset, that is, the obligee has the right to require others not to use (or use in a certain way) the external object, and can follow their own wishes the right to dispose of the claim.

Further, on the one hand, consumers enjoy de facto exclusivity to NFT. This exclusivity is guaranteed by the key (private key). The technical architecture of the blockchain determines that other subjects are responsible for an account address (public key) that must not be tampered with without the consent of the key holder. The obligation to record the semantic information. Therefore, in principle, the account address corresponding to the NFT cannot be tampered with without consent. This technical feature gives the holder an exclusive legal status for the NFT.

On the other hand, consumers do not naturally enjoy exclusivity to the digital assets mapped by NFT. This is because, at present, the digital assets often exist in the operator's server rather than on the blockchain, so the holder does not enjoy this kind of exclusivity, and the holder cannot prevent the operator or any third party from Digital assets are deleted and modified. From this perspective, this right is of course not exclusive.

To sum up, although consumers enjoy de facto exclusivity to NFT, they do not enjoy exclusivity to the corresponding digital assets. In other words, what consumers enjoy is a limited right.

** Written at the end of ******

Although the popularity of digital collections has faded, the discussion of legal issues in the Web3 field will affect almost all types of digital assets in the future. The theoretical results produced in the study of the legal attributes of digital collections are important for the compliance development of the Web3 field. Reference and valuable asset. Entrepreneurs and practitioners in related industries should draw conclusions from this and move forward toward the future with a compliance-oriented approach.