As early as the beginning of 2021, when NFT as an emerging concept just became popular in China, Sister Sa’s team has observed and analyzed the financial attributes of NFT, as well as the hype and use as a criminal tool such as fraud, illegal business, pyramid selling, etc. criminal risk. Recently, we have observed that at a time when the global economic growth is sluggish, the popularity of encrypted assets continues to decline, and the repeated epidemics have a significant impact on various industries in society, some small and medium-sized platforms in China’s NFT digital collection industry have been unable to withstand the pressure and are about to be destroyed by the times. wave of elimination .
In the current environment, Sister Sa’s team can almost make two predictions: (1) crimes related to NFT digital collections are likely to occur in the future; (2) small and medium-sized NFT digital collections that cannot stand the pressure The platform will inevitably go to a helpless bankruptcy liquidation. It can be said that once these two major problems appear in reality, it will be a major test for administrative regulatory agencies and judicial agencies. After all, we have never had a perfect legal characterization of NFT digital collections so far .
Whether it is for civil law or criminal law, it is crucial to give a clear characterization of NFT digital collections that is suitable for China’s national conditions. Conviction, sentencing, rights relief, etc. all depend on this. So, today, Sister Sa’s team will once again take a bite of this “hard bone” from both theoretical and practical perspectives.
1. From the existing theoretical point of view, what is NFT?
At present, there are roughly four types of NFTs qualitatively: (1) the theory of property rights ; (2) the theory of creditor ‘s rights ; (3) the theory of copyright and (4) the theory of independent rights . The so-called property right theory means that some scholars believe that NFT is a special and virtual thing, and the right of NFT holder to NFT is a kind of ownership similar to (or basically) in the traditional legal sense. , rights such as possession , use , disposal , and income can be exercised over NFTs . At present, overseas scholars, virtual asset holders and investors mainly hold this view.
The theory of creditor’s rights believes that NFT is a special kind of debt, which is essentially a right of claim . The person who holds the NFT can request the issuance platform, mint, custodian or other person who has control over the NFT to perform tasks such as viewing, displaying Scholars who hold this view to some extent believe that the essence of NFT is a certificate of rights , and it is not a digital collection itself or a certain substantive right.
The copyright theory believes that NFT is a special and new form of existence of works, and NFT is the ontology of digital works. Therefore, NFT can become the object of copyright , and it should enjoy legal protection equivalent to traditional works of art. The last point of view, the independent right theory, holds that NFT itself is an independent right , depending on its use, it can be a special personality right (avatar), a right of request, a certificate of right (ticket) , it can also be one of the manifestations of copyright (CC0-style authorized NFT)…
2. Defects in Real Right Theory in Practice
In fact, at present, the theory of real rights and the theory of creditor’s rights are becoming the two most mainstream views in the qualitative analysis of NFT. But Sister Sa’s team does not think that the theory of real rights or the theory of creditor’s rights can abstract and generalize the essence of NFT flawlessly . In terms of property rights, NFTs issued overseas do meet the definition of property rights to a large extent: buyers can hold the private key of NFTs, and most buyers can exercise the NFTs they hold. The right to possess, use, dispose of, and gain income, and even realize NFT mortgage or pledge, borrowing or financing through DeFi and other means. The key to this is that for NFTs issued overseas, users can directly hold the private key, and there is no limit on the shortest holding period. After obtaining the private key, users can trade on any platform.
It is also based on this difference between overseas NFTs and domestic digital collections, NFTs issued on overseas public chains tend to be regarded as a kind of property right by the academic community, while domestic digital collections are mostly regarded as a kind of creditor’s right .
(1) The theory of property rights is contrary to the Chinese practice of the digital collection industry
To put it simply, assuming that NFT is a property and the holder of NFT has property rights to it, then all buyers of digital collections can follow Articles 235 to 238 of the Civil Code. The stipulated right to claim on property requires (sues) China’s NFT digital collection platform to return the private key to itself . The so-called right of claim on property, also known as “the right to request for property rights” and “the right to appeal in property”, refers to that when the consummate state of the property right is obstructed or threatened to be obstructed, the owner of the property right shall restore the consummate state of the property right. A request may be made to infringe a person’s right to do a certain act or not to do a certain act. It is generally believed that the right to claim on property includes the request for the return of the original property, the request for removing the obstruction, the request for eliminating the harm, the request for restoring the original state, and the request for compensation for damages, etc.
Undoubtedly, the core value of NFT’s “uniqueness”, “exclusivity” and other characteristics lies in the private key. Then, buyers can claim that the act of purchasing an NFT without handing over the private key by the platform belongs to the undelivered original. behavior, and the behavior prejudice the buyer’s right to possess, use, dispose of and benefit . At this time, requiring the platform to return the private key should be supported by law. Obviously, this is inconsistent with the practice of my country’s digital collection industry.
(2) The theory of property rights contradicts the logic of supervision
We must be soberly aware that this practice of allowing users to directly hold NFT private keys and not control their transactions, although endows NFT with a strong property right attribute, but the financial attributes carried by NFT itself are also completely let go. Although this practice has ushered in a boom in the overseas NFT industry, more and more people are using NFT to carry out illegal and criminal acts such as fraud, money laundering, darknet transactions, etc. The development of overseas NFT is moving towards An increasingly unpredictable and risky future.
Although risks are always accompanied by opportunities, there are currently frequent and frequent Rug pull events in the overseas NFT industry (a proper term in the crypto-asset circle, referring to the project party running away with money), as well as the increasing criminal balance (Criminal Balance, referring to It is held by an unknown illegal encrypted wallet address, and the “fund pool” accumulated due to theft, fraud, extortion, darknet transactions, etc. by criminals) also proves that it is possible to endow NFT with a strong property right attribute. The catastrophic consequences – not only personal property safety cannot be guaranteed, private rights are difficult to remedy, but even a serious impact on social and financial stability . Therefore, if the theory of real rights is transformed into reality, and the NFT digital collection is recognized as a kind of “thing” in a legislative manner, there will be a major hidden danger-the financial risk is too great .
In the field of private law, there is a famous saying, Fayan: if the law does not prohibit it, it is freedom (that is, it can be done). If the NFT is a thing, and the holder of the NFT enjoys the “right to the world” in the traditional sense, then under the premise of your love and my will, it is not impossible for an NFT to fetch a sky-high price (traditional It is not uncommon for artworks to fetch sky-high prices).
Even if the regulatory authorities ban NFT hype in the name of public interest and believe that such behavior will harm the financial order, on the one hand, NFT even said that the proportion of virtual assets in China’s financial system as a whole is not large, and it is difficult to say that the hype of NFT numbers Collections will have a significant impact on the financial order; on the other hand, NFT digital collections, as works of art, are difficult to define in price. If others are willing to pay a high price for their artistic value, it is also the buyer’s freedom, expressing the truth in both parties ’ intentions. And in the case of consensus, the property of one party to the transaction is not illegal . Therefore, Sister Sa’s team believes that the theory of property rights is not suitable for China’s basic national conditions, and the simple and simple transplantation of legal concepts will be contrary to China’s consistent regulatory logic .
3. Defects in traditional legal theory
According to Mr. Liu Baoyu’s “Property Law”, the traditional civil law in civil law countries has two main characteristics in the perspective of property. The division of law; the second is that things must have a body , that is, the main body is the object of law. Both of these features are based on the traditional legal perspective, the conclusions drawn from the observation of the objective material world. It can be said that when traditional legal viewpoints deal with and interpret various data rights and interests generated by information as a carrier in the digital world and virtual world (objects have the characteristics of intangibility), whether it is the dichotomy of things and debts or the existence of things, they have already been Some inapplicable situations occurred .
In addition, although we have been able to confirm data rights through technical means, the unique exclusivity of real rights has begun to gradually disappear in the virtual world . Even at the level of traditional physical objects, Mr. Wang Liming believes that because many objects in modern society are created from the time It condenses the contributions of multiple subjects, and each subject has legitimate rights and interests that need to be recognized and protected. It is difficult to determine that a subject enjoys absolute exclusive control or complete ownership of the object . Not to mention that the use of data by current data owners often presents a situation of overlap and parallelism.
4. Is the “right bundle” the savior of NFT digital storage?
In this context, teacher Wang Liming proposed that in terms of data rights and interests, rather than applying the traditional civil law dichotomy of property and debt to analyze data rights and interests, it is better to introduce the theory of ” bundle of rights ” to observe the virtual world more comprehensively and objectively data rights in .
The bundle of rights theory is actually a view of rights analysis put forward by Hofield in the 1920s. This view holds that the essence of property rights is not the relationship between people and things in the traditional sense, but the legal relationship between people based on this, and is a legal relationship composed of a series of rights, such as the right to claim, privileges, etc. collection . That is to say, the bundle of rights view holds that any standard property rights should be regarded as a collection of rights held by the property owner against many other people (a pictorial analogy to a bouquet of rights by Mr. Wang Liming), and From this collection of rights, a specific right can be divided and used separately, so that a specific property can be used in parallel between different subjects, breaking the traditional property law’s principle of one property and one right , which is better adapted to the virtual property .
Sister Sa’s team believes that, at least for now, the view of the bundle of rights is more suitable for NFTs and digital collections than other views. NFTs are born with many attributes, which can be regarded as a piece of data or as a piece of data. As a digital artwork itself, it can also be regarded as a certificate of a certain right. And the actual use of NFT digital collections is being continuously developed, and the unique openness and inclusiveness of the rights-bound view can also meet the needs of its development . Therefore, at this stage, instead of treating NFT as a thing, it is more appropriate to regard it as a collection of multiple rights.
write at the end
Of course, the theory is only a theory, and how to translate it into a commercially and regulatory feasible solution is the key point . At present, cases involving NFT digital collections are accumulating, and criminal risks have begun to emerge. The legal community should speed up the pace of thinking and practice to better handle various cases that may occur in the future and better balance the rights and obligations of all parties in society .
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/dare-to-be-the-first-nft-legal-characterization-is-imminent/
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