Chinese authorities are taking a closer look at NFTs as they establish a legal framework for these digital assets. The Supreme People’s Procuratorate, China’s national agency responsible for legal prosecution, has released guidelines emphasizing the need for risk assessment and appropriate punishment for related crimes.

The document aims to distinguish between “true innovation” and “pseudo-innovation” from a legal perspective. It clarifies that consumers who purchase NFT digital assets do not acquire ownership in the traditional sense defined by civil law. While consumers cannot prevent others from accessing or sharing the digital assets represented by NFTs, they do maintain exclusive control over the ownership record on the blockchain, safeguarding it from potential alterations.

The Supreme People’s Procuratorate expresses concerns about NFTs, particularly due to their resemblance to virtual assets, which are prohibited in China. The agency also highlights the risks associated with NFTs and raises questions about absolute ownership and control over digital art.

This move by Chinese authorities is a response to the increasing popularity of NFTs in the country, despite the ban on cryptocurrency trading and related services introduced in 2021. China recognizes the potential of blockchain technology and the development opportunities presented by NFTs but aims to maintain control and reserve their usage for national purposes.

The Chinese government is even planning to launch its own NFT marketplace on the China Cultural Security Chain network, providing a platform for users to trade digital collectibles