Does domestic individual purchase NFT restricted circulation?

Recently, several domestic Internet giants have entered the NFT field one after another, developing and selling digital art in areas such as music and IP. However, after purchasing part of the NFT, Sister Sa’s team found that the digital artwork could not be circulated or resold , and could only be viewed on its own. So, what restrictions do domestic sellers have on the circulation of NFT ? Is it legal to restrict circulation? What is the reason for the restriction? With these questions in mind, Sister Sa’s team will use this article to comment on the current domestic NFT restrictions on circulation from the perspective of legal professionals, for readers to criticize and correct.

Restrictions on domestic NFT circulation

According to public statements from well-known domestic Internet companies, NFT is mainly used in digital art and collection, and IP limited peripheral development. Generally speaking, domestic sellers have imposed two-sided restrictions on the circulation of NFTs .

First, the domestic NFT adopts a limited sales model , and the quantity is limited. At this stage, most of the NFT products launched by the domestic NFT platform are limited editions, in order to increase the scarcity of the products and create a scarcity atmosphere. For example, some time ago, a company released a limited edition NFT skin, which caused the two skins to be instantly robbed, and the popularity was unprecedented.

Second, the financial attributes of domestically generated and circulated NFTs are weak . The so-called financial products refer to various non-physical assets that have economic value and can be publicly traded or cashed. Financial products have two characteristics: first, the price of the product depends on the size of the market’s capital, rather than its own value; second, people buy the product mainly for resale. Different from overseas NFT trading platforms, domestic companies have not produced scenarios for NFT secondary transactions, and there are no channels for transfers and gifts. The channels for speculating NFT products are strictly limited, and the influx of funds from all parties is strictly controlled. It can be said that at this stage, NFT in my country is only an electronic voucher for recording the content of digital asset rights and historical transaction circulation information, and does not have the characteristics of equivalent exchange, and there is no financial trend.

A breakthrough in restricting circulation

In the process of selling NFT products, some companies have also broken through the restrictions on NFT circulation . For example, a company that previously launched a variety of payment code NFT skins, its NFT products were snapped up and listed on a well-known second-hand trading platform at high prices, the highest of which was hyped up to 1.5 million yuan. But after a period of hype, the second-hand trading platform removed related NFT products . It can be seen that at this stage, there is no place or opportunity for hype and price drive up in domestic NFT products. The only properties and can not be standardized and traded NFT split, but also to distinguish it from Bitcoin homogenization tokens virtual currency represented.

Reasons for restricting circulation

As mentioned above, in the context of the large NFT bubble this year, allowing NFT to enter the secondary market is bound to speculate on NFT products with sky-high prices. The domestic NFT entrants obviously also know that the second transaction is the key to their profitability.

So, what is the reason for the restricted circulation of NFT?

1. The perspective of administrative supervision

Since it has not harmed the interests of the public or unspecified people, and the people have ownership of their own assets, there is no legal risk in producing NFT assets and holding all of their NFT assets , which is tolerated by Chinese law. However, due to the uniqueness of NFT itself, it still possesses certain financial attributes and has the possibility of developing into a financial product.

If there are no restrictions on NFT, as mentioned above, its free circulation will inevitably lead to excessive price spikes. Its price is no longer determined by the relationship between supply and demand or its own value, but depends on the size of the market’s capital. At this time, buying NFT is no longer for consumption, but for maintaining value, increasing value, and ultimately for reselling ownership for profit. In this way, a new field of financial products has been formed , which is unwilling to see by the administrative supervision departments, and therefore restricts the circulation of NFTs.

In addition, in accordance with the provisions of Document No. 38 in 2011, “Decision of the State Council on Cleaning up and Rectifying Various Trading Places and Practically Preventing Financial Risks” and Document No. 37 in 2012, “Implementation Opinions of the General Office of the State Council on Clearing Up and Rectifying Various Trading Places”, If you want to open NFT trading on a formal exchange, then the exchange must be established with the approval of the provincial people’s government , or the State Council or the financial management department of the State Council must be approved . In reality, the trading venues of NFT products often do not have such approvals, so their legal circulation will of course be restricted. In fact, these two approvals are extremely difficult to obtain.

2. The perspective of autonomy of will

In addition to the above administrative supervision considerations, from the point of view of simply entering into a contractual transaction NFT between private individuals, according to the principle of autonomy of will , NFT transactions certainly do not need to be restricted, and in fact they should not be restricted. However, considering the unique properties of NFT, its price fluctuates greatly. Except for the contract for instant delivery between private individuals, if there is a long time span between the signing of the contract and the actual delivery of the NFT, then there may be NFT The price has changed significantly, resulting in the obvious unfairness of the contract or the inability to realize the purpose of the contract. At this time , contract disputes are bound to occur , which will increase the costs of the parties for no reason . Therefore, in order to avoid unnecessary disputes, the circulation of NFTs can also be restricted.

Write at the end

In China, NFT digital art still belongs to an emerging field. Although the current mainstream trend is to strictly restrict its circulation, this does not mean that collecting NFT products loses its meaning. If the market is further opened in the future , NFTs can be transferred or sold reasonably and legally only through formal sales channels .

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/does-domestic-individual-purchase-nft-restricted-circulation/
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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