Can NFT be resold in China?

Question: Where is the border of caution?

As an NFT observer and legal service provider, we found a seller on a domestic second-hand trading platform selling NFT products of this system or a friend. After communicating with the store owner, some stores replied: delivery within a few days; some replied: delivery in 180 days. About a day later, we found that NFT products were removed from the second-hand website, NFT sales information and deleted by the platform, one after another…

There are two legal issues here: 1. What responsibilities should be borne for deceiving consumers who can deliver NFTs knowing that they cannot deliver goods; 2. What are the reasons why online platforms currently prohibit the sale of second-hand NFTs? It will also extend to a deeper legal issue, 3. What legal channels can second-hand NFT trade through?

NFT compliance and second-hand transactions

There is a dispute over true and false NFTs in the circle. Friends in the old currency circle have a lot of criticisms about the NFT on the alliance chain and consider it to be a fake NFT. However, as far as the current domestic legal framework is concerned, there is no doubt that the NFT compliance on the alliance chain restricts trading Highest. Dachang has done a good job in NFT-based cultural peripheral products. Sister Sa and the team’s lawyers also collected some NFTs (known as digital artworks) that they cast and sold.

However, there are always people who are too anxious and want to cash out the picture or music NFT they bought for 9.9 yuan or 99 yuan on a second-hand goods consignment website such as a fish.

In view of the fact that most NFTs are now limited to 180 days before they can be transferred, and the seller should be aware of this matter. Therefore, if the seller and the buyer agree to deliver the NFT work in a few days, obviously, the seller cannot perform the sale and purchase contract between it and the buyer at this time. Then, according to Article 577 of the Civil Code, “If one of the parties fails to perform the contractual obligations or the performance of the contractual obligations does not comply with the agreement, it shall bear the liability for breach of contract such as continuing to perform, taking remedial measures, or compensating for losses.” The seller first bears the civil breach of contract responsibility , and because the NFT works virtually impossible to fulfill, therefore, in accordance with the provisions of Article 580, “Civil Code”, the buyer may request to lift the contract , but does not affect its request to continue the seller liable for breach.

In addition, if the seller conceals the fact that its NFT work cannot be transferred , so that the buyer mistakenly believes that it can obtain the ownership of the NFT work through a transaction in a few days, then the seller’s behavior is in fact a fraudulent method that makes the other party violate the true meaning. The implementation of civil juristic acts under the circumstances. According to Article 148 of the Civil Code, it constitutes a civil fraud , and the buyer, as the defrauded party , has the right to cancel and has the right to request the people’s court or arbitration institution to cancel the contract between it and the seller. At this time, the other party shall return the property that has been obtained and shall compensate the buyer for possible losses.

At the same time, the seller’s behavior may also be suspected of crime . If the seller said that the NFT does not exist at all, or refuses to perform the corresponding obligations after receiving the money paid by the buyer without telling the seller that the delivery is undeliverable, then if the amount involved meets the amount specified in Article 266 of the Criminal Law Larger, the seller’s behavior is suspected of constituting a crime of fraud, and on the basis of the original civil liability, it should also bear corresponding criminal liability. 

Reasons for second-hand consignment sites to reject NFT

The reason for the ban on the sale of NFTs on the online platform has been verified by multiple inquiries, and no existing laws and regulations have been found. However, in the “Regulations for the Management of Prohibited Information on Certain Platforms”, we found that the sale of “goods or services suspected of fraud, theft, cheating, or harassment of others” is prohibited. For goods and services that are fraudulent tools, it is stated: “Cannot be queried or cannot Virtual goods that arrive in the account within 72 hours” lists the expense-type goods that the three major operators cannot officially check, the goods whose return period cannot be checked and determined, and the slow-charge card-type virtual goods that cannot actually be received within 72 hours. Wait.

Sister Sa recalled the scene of her first purchase of NFT. She obviously purchased a virtual product (requiring 48 hours payment). The store mailed me a paper certificate and asked me to click to receive the goods and click to receive the goods. At the same time, NFT hit my collectible wallet. Almost at the same time when you clicked to receive the goods, the NFT arrived, which is obviously not a “slow charge”.

If it is a second-hand NFT, the smart contract at the time of casting has already required 180 days or more not to be traded. Therefore, from this perspective, the platform’s ban on the sale of NFT products has its own internal corporate rules.

However, Sister Sa believes that things are far from that simple, and the financial possibilities of NFTs discourage the platform.

Obligations of second-hand consignment sites

Second-hand consignment websites belong to online trading platforms and e-commerce platforms , and should be regulated by the “Internet Transaction Supervision and Administration Measures” and the “E-Commerce Law”. Both laws stipulate the issue of joint liability of the platform .

According to the Regulations for the Supervision and Administration of Online Transactions, the operators of online trading platforms shall establish an inspection and monitoring system for the operators on the platform and the information on goods or services released by them. If an online trading platform operator discovers that the goods or service information on the platform violates market supervision and management laws, regulations, and rules, harms national and social public interests, and violates public order and good customs, he shall take necessary disposal measures in accordance with the law, keep relevant records, and report to Report from the market supervision and management department at or above the county level where the platform is located.

If the operator of the online trading platform knows or should know that the goods sold or the services provided by the operator on the platform do not meet the requirements for the protection of personal and property safety, or have other acts that infringe on the legitimate rights and interests of consumers , and fail to take necessary measures, they shall contact the platform in accordance with the law. The internal operators shall bear joint and several liabilities.

Given that NFTs also have the issue of the transfer of intellectual property (IP) rights , Article 45 of the “E-Commerce Law” e-commerce platform operators know or should be aware of infringements of intellectual property rights should be deleted, blocked, or suspended. Necessary measures such as opening links, terminating transactions and services; if necessary measures are not taken, the infringer shall be jointly and severally liable . Therefore, the second-hand consignment platform is very cautious about the consignment of NFT products, and is worried about taking joint and several liabilities.

Is there a compliant second-hand NFT trading place in China

This question depends on how the regulatory authorities will characterize the NFT in the future and whether it has financial attributes.

If NFT is regarded as an ordinary virtual commodity without financial attributes, its second-hand transaction will be allowed, at least it will not constitute the crime of illegal operation . Occasional speculation can be dealt with by the regulatory scheme that regulates the “De X” platform for speculating shoes.

If NFT is regarded as a special virtual commodity with its own financial attributes, second-hand transactions need to obtain a national financial license, otherwise it will be suspected of illegal business operations in Article 225 of the Criminal Law . Readers may be puzzled by Sister Sa’s conservative views. Some friends even pointed to the nose to scold me, but the laws and regulations are there. We legal persons can only tell the truth and abide by the law.

Our team is also young people, full of ideals for innovation. We are trying to use the web of law to give market entities a boundary for behavior, and which obligations can be “just done without prohibition by law” after they have been complied with. However, in view of the origin of NFT, especially its genetic relationship with token\coin, regulators and the general public are worried about the tendency of NFT to be financialized.

In particular, we found that financial exchanges and trading centers approved by various regions are eager to try second-hand NFT transactions. According to the system of current laws and regulations, it is difficult to use local financial licenses to block the legal risks of illegal business crimes.


Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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