Author | Chen Lishan, Li Yingheng, Huang Zeyuan, Zheng Qiaodan, Li Jiada, Editor | Yu Baicheng, Typesetting | Wang Jilongyan

This year is known as the "first year" of NFT. Artists, celebrities, and giant companies have entered the NFT market one after another. The record high NFT price has made it the focus of public attention. 01 Blockchain launches NFT series of special research, inventory and summary of NFT issuance market, investment and financing status, hot products, policies and other related content, to help readers have a more comprehensive understanding of the NFT market.

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1. Blockchain products

Blockchain is the underlying technology of NFT, and NFT is a typical application of blockchain. It should be noted that the blockchain has become one of the most important basic technologies in the digital economy era due to its characteristics of transparency, openness, traceability, and non-tampering, and has risen to the national level. Although NFT uses the underlying technology of the blockchain, the legal policy does not explain the NFT itself.

As early as 2019, the development of blockchain technology has become a national strategy. General Secretary Xi Jinping emphasized during the 18th collective study of the Political Bureau of the Central Committee that "blockchain should be used as an important breakthrough point for independent innovation of core technologies, clarify the main direction of attack, increase investment, focus on overcoming a number of key core technologies, and accelerate the promotion of Blockchain technology and industrial innovation development".

In addition, local governments are constantly proposing various supportive and regulatory policies to facilitate the development of blockchain technology. Since the beginning of this year, blockchain-related policies have continued to be introduced. In March, the blockchain was written into the "The 14th Five-Year Plan for National Economic and Social Development of the People's Republic of China and the 2035 Long-term Goal Outline", which proposed to create new advantages in the digital economy and accelerate the promotion of digital industrialization. Promote the innovation of blockchain technology, focus on the development of blockchain service platforms and application solutions in the fields of financial technology, supply chain management, and government services with the alliance chain as the focus, and improve the supervision mechanism.

In June, the Ministry of Industry and Information Technology and the Cyberspace Administration of China jointly issued the "Guiding Opinions on Accelerating the Application of Blockchain Technology and Industrial Development", pointing out that it should focus on supply chain management, product traceability, data sharing and other real economic fields, and promote the integration and application of blockchain. Support the digital transformation of the industry and the high-quality development of the industry. Promote the application of blockchain technology in public service fields such as government services, evidence deposit and collection, and smart cities, and support the transparency, equality, and precision of public services.

From the perspective of the provision, use, and management of blockchain information services, the "Regulations on the Management of Blockchain Information Services" issued by the Internet Information Office of the People's Republic of China on January 10, 2019 requires that blockchain information service providers need to conduct Filing, modification, and termination of service should go through the modification or cancellation procedures. Service providers developing and launching new products, new applications, and new functions shall conduct security assessments in accordance with relevant regulations. Those who violate the "Regulations" will be punished accordingly in accordance with these regulations and relevant laws and administrative regulations; if a crime is constituted, criminal responsibility will be investigated according to law.

Related Policy Documents

"Guiding Opinions on Accelerating the Application of Blockchain Technology and Industrial Development"

"Blockchain Information Service Management Regulations"

"Liaoning Province Intellectual Property Protection Regulations"

"The Fourteenth Five-Year Plan for National Economic and Social Development of the People's Republic of China and Outline of Long-term Goals for 2035"

"Cyber ​​Security Law"

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2. Virtual currency

Tokens can be divided into two types: homogeneous and non-homogeneous, but there are essential differences between the two. Homogenization means that tokens can be exchanged indiscriminately. Both Bitcoin and Ethereum are homogeneous tokens. The non-homogeneous nature of NFT distinguishes it from virtual tokens, and NFT carries the value of the physical or digital assets attached to it. Under my country's high-pressure policy on virtual currency, it is very important to clarify the difference between the two.

Because virtual currency is easily used for illegal activities such as money laundering, and lacks an exchange mechanism, it is easy to cause inflation and market chaos. my country has always adopted a policy of suppressing virtual currencies. As early as 2013, the People's Bank of China and other five ministries and commissions issued the "Notice on Preventing Bitcoin Risks", which clarified that Bitcoin is a specific virtual commodity that is not issued by monetary authorities, has no legal compensation or compulsion, and has no The equivalent legal status of currency cannot and should not be used as currency in circulation in the market.

In 2017, the financing activities through the issuance of virtual tokens disrupted the market order. Seven ministries and commissions including the People's Bank of China jointly issued the "Announcement on Preventing Financing Risks of Token Issuance" and immediately stopped all kinds of token financing activities, requiring any organization and individual to Do not illegally engage in token issuance and financing activities; strengthen the management of token financing trading platforms, prohibit the exchange business between legal tender, tokens, and "virtual currencies"; require financial institutions and non-bank payment institutions not to carry out transactions with tokens Businesses related to issuance financing transactions.

In September this year, the People's Bank of China issued the "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Transaction Hype", which further clearly pointed out the attributes of virtual currency and virtual currency-related activities, clearly proposed a working mechanism to deal with the risk of virtual currency transaction speculation, and strengthened transaction speculation. risk regulation. This policy has given NFT a warning. If it relies on the development of currency issuance financing and speculation arbitrage, NFT will follow in the footsteps of virtual currency. Therefore, it is very important to distinguish the difference between virtual currency and NFT. It is wrong to use the idea of ​​virtual currency to develop NFT.

Related Policy Documents

"Announcement on Preventing Financing Risks of Token Issuance"

"Notice on Preventing Bitcoin Risks"

"Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions"

"Risk Tips on Preventing Illegal Fundraising in the Name of "Virtual Currency" and "Blockchain""

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3. Virtual assets/digital collections

NFT is produced through human labor, which itself condenses the abstract labor of human beings. Similar to virtual assets, NFT supports price transfer, transaction, and income generation, and has value. NFT holders can possess, use, dispose of, and benefit from, and are disposable. In October of this year, the words "NFT" disappeared from the inner pages of the Tencent Magic Core APP and the Alipay applet "AntChain Vermicelli", and were replaced with "digital collections". From this entry point, moving closer to virtual assets or digital collections may be the possible landing form of NFT under my country's compliance framework.

Virtual assets are protected by law. According to Article 127 of the "Civil Code", if the law has provisions on the protection of data and network virtual property, follow the provisions. Accordingly, the "Civil Code" clarifies that data and network virtual property are included in the scope of protection objects of civil property rights.

Today, as the scale of the digital economy is becoming more and more dominant, digital assets have become an important part of economic activities. The development of NFT in the direction of digital collections or virtual assets may be the safest way at present. At present, many provinces and cities have issued policies related to "digital asset transactions". "Ningbo Three-Year Action Plan for Accelerating Blockchain Industry Cultivation and Innovative Application (2020-2022)" proposes to explore the establishment of a blockchain supervision mechanism, focusing on strengthening blockchain in finance, digital asset transactions, e-government, and personal data protection Industry regulatory governance mechanisms in other fields;

The "Several Policies and Measures of Hainan Province on Accelerating the Development of the Blockchain Industry" issued in May 2020 pointed out that leading enterprises should be supported to explore the construction of digital asset trading platforms, explore asset digitization, digital asset rights confirmation and protection, digital asset global flow, Standards and technical models for digital asset transactions and other aspects will promote digital asset-related business formats to be tried first in Hainan.

The "Chengdu Government Work Report 2020" stated that the construction of a blockchain intellectual property pledge financing service platform will be accelerated, the establishment of a digital asset trading center will be promoted, and the legal digital currency pilot will be solidly promoted.

Related Policy Documents

"Civil Code"

"Ningbo Three-Year Action Plan for Accelerating Blockchain Industry Cultivation and Innovative Application (2020-2022)"

"Several Policies and Measures of Hainan Province on Accelerating the Development of Blockchain Industry"

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4. Artwork

Digital artwork is the most important form of existence of NFT. At present, there are generally two ways to create artwork NFT, one is to directly create and form NFT artwork online, and the other is to cast offline physical artwork into NFT artwork. From the perspective of the legal nature of NFT artwork, NFT artwork is essentially a work presented in digital form. From the perspective of the legal effect of NFT artwork blockchain storage, its essence is also a kind of electronic data stored in the blockchain network. From the perspective of NFT physical artwork casting rights, the relationship between NFT artwork and artwork authors, collectors, and user rights is related.

From the perspective of the definition of artworks, the first paragraph of Article 2 of the "Artwork Management Measures" stipulates: "Artworks referred to in these regulations refer to paintings, calligraphy and seal cutting works, sculpture sculptures, artistic photography works, and installation art works. , arts and crafts works, etc., and limited copies of the above-mentioned works. The works of art mentioned in these measures do not include cultural relics.” Accordingly, NFT does not currently belong to the category of works of art.

Interestingly, before the large-scale rise of NFT, a group of pioneering artists used it to explore the possibility of developing digital artworks. For some works of art NFT, making regulations from the regulations of works of art has positive and profound significance for artistic creation in the era of digital economy.

Related Policy Documents

"Administrative Measures for Art Management"

"Copyright Law of the People's Republic of China"

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The rich diversity of online publications is similar to NFT, and its manifestations are all digital works, but the two are not the same. It should be noted that at present, NFT is not equal to digital works, or even the deposit certificate of digital works. It is just a cryptographic expression of digital copies on the chain.

Formally, NFT is currently the closest to online publications. According to the "Regulations on the Administration of Online Publishing Services", online publications refer to digital works that are provided to the public through information networks and have publishing characteristics such as editing, production, and processing, and the scope mainly includes:

(1) Original digital works such as texts, pictures, maps, games, animations, audio and video books, etc. that are informative and ideological in the fields of literature, art, and science;

(2) Digitized works consistent with published books, newspapers, periodicals, audio-visual products, electronic publications, etc.;

(3) Digital works such as online literature databases formed by selecting, arranging, and assembling the above works;

(4) Other types of digital works identified by the State Administration of Press, Publication, Radio, Film and Television.

From the operational level, the law has made policy regulations on the generation and circulation of online publications. According to Article 7 of the "Regulations on the Administration of Online Publishing Services", engaging in online publishing services must be approved by the publishing administrative department in accordance with the law and obtain the "Online Publishing Service License". "According to Article 22 of the "Network Security Law of the People's Republic of China", if network products and services have the function of collecting user information, their providers shall expressly indicate to the user and obtain consent.

Related Policy Documents

"Publication Market Management Regulations"

Regulations on the Administration of Online Publishing Services

Measures for the Administration of Internet Information Services

"Copyright Law of the People's Republic of China"

"Regulations for the Implementation of the Copyright Law of the People's Republic of China"

"Computer Software Protection Regulations"

"Copyright Collective Management Regulations"

"Regulations on the Protection of the Right to Information Network Dissemination"

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6. Game equipment

The game field is also the most typical application of NFT, including the earliest collection games such as Cryptokitties. But at present, richer gameplay has appeared in many games, such as the simulation business game The Sandbox, the racing game Battle Racers, and even the NFT version of liquidity mining, such as Axie Infinity. NFT-based game equipment makes these games more "realistic", and there is even a phenomenon of relying on playing games to support their families.

At present, the regulations related to online game virtual currency transactions are mainly concentrated in the documents formulated by the abolished Ministry of Culture. "License" and "Notice of the Ministry of Culture on Strengthening the Supervision of Online Game Publicity and Promotion Activities" stipulate that online game operating companies shall not provide users with online game virtual currency, virtual props exchange services for legal currency or physical objects.

At present, the currently effective laws and regulations do not directly address the assets and virtual currency related to online games. In judicial practice, when some online accounts and equipment are stolen, the court believes that the theft of online game virtual currency is convicted and sentenced for the crime of illegally obtaining computer information system data. Some courts believe that valuable things (including intangible things) that citizens can monopolize and manage, can be transferred and disposed of, can be recognized as citizens’ private property, and online game equipment and virtual currency are virtual property. From this point of view, it is a trend that valuable content such as virtual currency and equipment in online games become virtual property.

Related Policy Documents

"Civil Code"

"Interim Measures for the Administration of Online Games" (Abolished)

"Network Culture Business License"

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7. NFT industry standard

At present, although my country has not given specific definitions and regulations for the use of NFT in terms of policy, the rapid outbreak and crazy growth of NFT this year have made NFT compliance inevitable. At present, various institutions and enterprises are actively establishing NFT-related standards.

In September, the Standardization Working Committee of the China Technology Market Association under the Ministry of Science and Technology jointly established a working group with a number of industry-university-research institutions to jointly carry out the development and drafting of the "NFT Platform and Product Evaluation" group standard. It aims to further explore the digital transformation and digital technology application in the field of intellectual property, and establish a set of relevant group standards that suit China's national conditions and meet the long-term and healthy development needs of the domestic NFT industry as soon as possible.

"Speeding up the development of NFT-related standards has become an industry consensus."

——Wang Bing, Deputy Secretary-General of China Technology Market Association

In October, the first self-regulatory convention in the NFT industry was released. Led by the National Copyright Trading Center Alliance, China Academy of Art, Zhejiang Hangzhou Internet Notary Office, Ant Group, JD Technology, Tencent Cloud, etc. jointly released the "Digital Cultural and Creative Industry Self-Discipline Convention", aiming to strengthen industry self-discipline and establish a benign digital cultural and creative industry The development ecology of the industry helps the development of China's cultural and creative industries.

The "Convention" pointed out that it is necessary to stick to the original intention of blockchain technology to serve the development of digital cultural and creative industries, and provide innovative solutions for the confirmation and circulation of digital cultural and creative works, so that creators' works can better reach the market and promote the prosperity of the original cultural industry develop. Make full use of blockchain technology to protect the copyright of digital cultural creations on the chain and protect the reasonable rights and interests of creators. Among them, resisting hype is an important consensus of the Convention.

"Through the release and implementation of the Convention, we hope that more institutions and social forces will participate in the standardized development of the digital cultural and creative industry, and jointly create a clean, fair and healthy development environment for the development of the cultural industry."

——Li Heng, Chairman of National Copyright Trading Center Alliance