Legal Perspective of NFT Digital Collections in China

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The rise of Non-Fungible Tokens (NFTs) has sparked global interest, particularly within the Web 3.0 and digital asset ecosystems. In China, while blockchain innovation continues to evolve, the legal framework surrounding NFT digital collections remains cautious and highly regulated. This article explores the current legal landscape for NFTs in China, focusing on key regulatory guidelines, platform operations, intellectual property rights, and user ownership—offering a clear, SEO-optimized analysis for stakeholders navigating this emerging space.

NFTs Are Not Virtual Currency Under Chinese Law

One of the most critical distinctions in China’s regulatory approach is the separation between NFT digital collections and virtual currency. On September 15, 2021, the People’s Bank of China (PBOC), the Cyberspace Administration of China (CAC), and nine other agencies jointly issued the Notice on Further Preventing and Dealing with the Risk of Speculation in Virtual Currency Transactions (Yin Fa [2021] No. 237), commonly known as Notice 237.

This notice explicitly prohibits any financial activities involving virtual currencies such as Bitcoin, Ethereum (ETH), and USDT. These assets are deemed to pose risks to financial stability due to their decentralized nature, speculative trading, and potential use in money laundering.

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However, NFT digital collections—when properly structured—do not fall under this prohibition. Unlike fungible cryptocurrencies, NFTs represent unique digital items such as artworks, collectibles, or cultural derivatives. As long as they are not used as a medium of exchange or investment vehicle, they are not classified as virtual currency under Chinese law.

To reinforce this boundary, the China Internet Financial Association, the China Banking Association, and the China Securities Association jointly released the Initiative on Preventing Financial Risks Related to NFTs in April 2022. This document outlines six key principles:

While these guidelines are not legally binding, they reflect strong regulatory intent: NFTs must remain de-financialized to comply with national policies.

Centralized vs. Decentralized Blockchains: The Chinese Model

Globally, most NFTs are minted on public, decentralized blockchains like Ethereum. However, due to restrictions on virtual currency usage, domestic NFT platforms in China operate primarily on consortium or private blockchains, which are permissioned and centrally managed.

Examples include:

Although some platforms use sidechains linked to Ethereum, cross-chain functionality is restricted. Users cannot transfer their NFTs to public Ethereum networks or trade them using ETH. This ensures compliance with Notice 237 by eliminating reliance on prohibited virtual currencies.

Furthermore, all blockchain information services in China must be registered with the CAC under the Administrative Regulations on Blockchain Information Services. Since 2019, over nine batches of blockchain projects have been officially filed—many of which involve NFT platforms.

This centralized model creates a distinct China-specific NFT ecosystem, isolated from global decentralized markets but aligned with domestic regulatory priorities around control, traceability, and anti-money laundering.

Primary and Secondary Markets: Controlled Circulation

China does not outright ban NFT issuance or trading—but it tightly controls how these activities occur.

Under State Council Document No. 38 (2011), any platform facilitating financial product trading must obtain approval from financial regulators. Therefore, while primary sales (initial minting and distribution) are generally permitted through compliant e-commerce models, secondary market trading is heavily restricted.

Most domestic platforms adopt one of three approaches:

  1. No secondary market – Users cannot resell or transfer NFTs
  2. Limited gifting only – Transfers allowed after a holding period (e.g., 7 days to 2 years)
  3. Controlled resale with fees – A few platforms allow resale and collect commissions

For example, the Golden Idea Case—a landmark copyright dispute decided by the Hangzhou Internet Court—revealed that platform NFTCN charges:

Importantly, even when resale is allowed, platforms often restrict commercial use. User agreements typically state that NFTs are for personal purposes only—such as study, entertainment, or collection—not for profit-making ventures.

This controlled circulation model supports innovation while minimizing speculation and financial risk.

Ownership Rights: Are NFTs Recognized as Virtual Property?

Under Article 127 of the Civil Code of the People’s Republic of China, data and network virtual property are recognized as protectable assets—if other laws provide specific protections.

While the term “virtual property” is not clearly defined, judicial precedents—including cases involving game items and digital assets—suggest that NFT digital collections possess property attributes. Once purchased on a compliant platform, users can reasonably claim ownership rights, including the ability to possess, use, transfer (where allowed), and dispose of their NFTs.

However, actual control depends heavily on platform terms of service. Many agreements limit users’ rights explicitly:

Additionally, owning an NFT does not automatically grant intellectual property rights to the underlying work. That distinction is crucial—and leads directly to one of the most complex legal areas in NFT law.

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Intellectual Property Rights: What Do You Actually Own?

When purchasing an NFT, buyers typically acquire:

Unless otherwise stated in a license or assignment agreement, copyright remains with the creator or issuer.

Most platforms offer only a narrow license—for personal, non-commercial use such as display or collection. Some progressive platforms go further:

But even in these cases, full copyright transfer is rare. For true ownership of IP rights (e.g., reproduction, adaptation, distribution), a separate written agreement is required.

The Golden Idea Case clarified several key points:

  1. An NFT transaction is a sale of property interest—not a copyright transfer or license
  2. Secondary sales constitute information network transmission, not issuance of works
  3. Therefore, the exhaustion of rights principle does not apply—each resale may require new copyright authorization
  4. Copying for display purposes is absorbed into transmission rights; no separate infringement claim needed

These rulings signal that platforms bear responsibility for preventing IP violations—including conducting preliminary copyright checks and responding to takedown requests.

Frequently Asked Questions (FAQ)

Q1: Can I legally own an NFT in China?

Yes. While regulatory clarity is still evolving, courts recognize NFTs as having property value under civil law. Ownership is subject to platform rules and must avoid financialization.

Q2: Is it legal to resell NFTs in China?

Only on platforms that permit it—and often under strict conditions. Most platforms either ban resale or limit it through holding periods and usage restrictions.

Q3: Do I get copyright when I buy an NFT?

No. Unless explicitly granted via license or assignment, copyright stays with the creator. You own the token, not the underlying artwork or media.

Q4: Can Chinese NFTs be traded internationally?

Generally no. Due to blockchain isolation and foreign exchange controls, cross-border transfers are technically and legally complex—and currently discouraged.

Q5: What happens if my NFT platform shuts down?

Since many operate on private or consortium chains, there’s risk of loss if access is revoked. Always review platform stability and data retention policies before purchase.

Q6: Are there tax implications for NFT transactions?

While no specific NFT tax rules exist yet, income from secondary sales could be treated as taxable gains under existing regulations. Consult a tax professional for guidance.

Conclusion: A Unique Path Forward

China’s approach to NFT digital collections reflects its broader digital economy strategy: innovation within boundaries. By promoting blockchain utility without financial speculation, regulators aim to foster cultural digitization while safeguarding financial order.

Core keywords defining this space include:

As legislation evolves and judicial interpretations deepen—especially around valuation, taxation, and cross-platform interoperability—the ecosystem will continue to mature. For now, success lies in balancing creativity with compliance.

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