Author: Deng Jianpeng (Professor of Law School, Central University of Finance and Economics); Source: "Hotspot Perspective" of "Journal of Law" Issue 5, 2024
[Fund Project] This article is a phased research result of the "Central University of Finance and Economics Major Research Support Plan 'Digital Economy and Digital Governance Research'" project of the basic scientific research business expenses of central universities
Abstract: Non-homogeneous tokens generally include tokens issued on the blockchain (carrier layer) and the mapped digital works (mapping layer). This structure makes the industry mainly subject to financial law risks and intellectual property law risks, and the two types of risks are highly concentrated on the trading platform. In order to regulate the risks of this industry, regulators need to take trading platforms as the main regulatory targets. On the one hand, as the main body regulating both parties to the transaction, platform operators focus on fulfilling their obligations to review the legality of digital works; on the other hand, regulators regard platform operators as the focus of regulation, and take consumer rights protection as the orientation to prevent the platform from breeding financial legal risks.
Keywords: Non-fungible token; Legal risk; Trading platform; Blockchain; Carrier layer; Mapping layer
Table of Contents
Introduction
I. The structure and legal risks of non-fungible tokens
II. The necessity of the platform as a regulatory center
III. Specific ways to regulate trading platforms
IV. Conclusion
Non-fungible tokens refer to tokens that are non-replicable and difficult to divide, using blockchain as the underlying technology and usually following technical standard protocols such as Ethereum (such as ERC-721). As a data unit stored in the blockchain ledger, the information recorded can confirm the ownership of the mapped digital works. Non-fungible tokens are called Non-Fungible Tokens in English, or NFTs for short. They are often translated as non-fungible tokens in China, commonly known as digital collections. Their important value, as scholars say, is that they can more clearly identify and trace the right owner, which is conducive to protecting property rights. [1] Since 2020, as a new thing that combines blockchain technology with digital content (pictures or audio and video, etc.), non-fungible tokens have caused a huge response in the field of digital works, and even partially reconstructed the structure of rights and obligations of digital works.
However, non-fungible tokens have many legal risks, especially challenges to financial law and intellectual property protection. Mainstream research in China has mostly approached relevant legal issues from the perspectives of copyright infringement or the legal attributes of non-fungible tokens. Many studies focus on the application of blockchain technology in the field of copyright and the risks of copyright transactions; [2] some studies explore the liability of trading platforms for copyright infringement; [3] or discuss the legal attributes of non-fungible tokens from the perspective of rights bundles; [4] or analyze the legal nature of non-fungible tokens in overseas public chain technology environments; [5] or actually analyze the legal nature of NFT digital work transactions in domestic alliance chain/private chain environments; [6] and so on. Foreign scholars are concerned about the issues of non-fungible tokens in the field of copyright protection such as online games. Some scholars believe that non-fungible tokens create a kind of "programmable creative autonomy" and give authors control over their works; [7] some scholars believe that the non-fungible token transaction of works may not be subject to the principle of exhaustion of rights in copyright law, resulting in restrictions on the rights of non-fungible token buyers. [8] With the increase in the application scenarios of non-fungible tokens, the focus of legal research has shifted from copyright to a wider range of rights types and legal attributes. For example, some scholars have argued from the perspective of information theory that possession theory can be the private law basis for protecting intangible property such as non-fungible tokens; [9] Some scholars have argued that holders of non-fungible tokens are owners rather than intellectual property licensees, and the law should protect this new type of ownership. [10]
However, domestic and foreign scholars have conducted little research on the comprehensive analysis of legal risks and regulatory ideas for non-fungible tokens. In addition, only a few studies have been conducted from the perspective of financial law. [11] Based on the achievements and shortcomings of predecessors, this article first analyzes the structure of non-fungible tokens; secondly, based on this, it analyzes the main types of legal risks of non-fungible tokens and their relationship with trading platforms; thirdly, it analyzes the appropriateness and advantages of trading platforms as regulatory centers; thirdly, it explores the specific ways and limits of regulating trading platforms; and finally, it concludes.
Non-fungible tokens provide mainstream applications for digital works ownership confirmation and trading. For non-fungible tokens stored on the full data chain, such as BRC-20 tokens, the digital files "engraved" based on the Ordinals protocol are directly recorded on the Bitcoin blockchain. The holder of the key can achieve exclusive control and control over the "satoshi" (token) of the inscription (the mapped digital work). The non-fungible token on the Bitcoin blockchain is equivalent to a proof of ownership, ensuring that the recipient with the private key can control and access the genuine on-chain digital work. [12] As a more mainstream application, the digital works mapped by non-fungible tokens on Ethereum are mostly stored outside the chain. Generally, non-fungible tokens have a two-layer structure, including on-chain tokens (carrier layer) and their mapped digital works (mapping layer). Their rights structure involves the property rights of the carrier layer and the rights of the digital works of the mapping layer.
First, in the public chain technology environment, the carrier layer has non-copyable physical properties, and realizes exclusive control of the holder through the key, which has the characteristics of property rights. However, as a new type of intangible property based on the blockchain architecture, it challenges the traditional concept of property rights that "things must have a body". Scholars even believe that this is a subversive innovation in the ownership model, allowing valuable things to be defined independently of the physical object. In the blockchain world, once an asset is created, only the owner has the right to control it. People do not have to worry about the security of the transaction process. As long as it has sufficient consensus across the entire network, it will not be easily copied. [13] However, most mainstream papers analyze the legal attributes of non-fungible tokens, such as "network virtual property theory", "property right theory", "creditor's rights theory", "property interest theory", etc. [14], which confuse the carrier layer with its mapping layer and ignore the differences between the two. Some scholars believe that the core elements of NFT’s function being equivalent to objects are its disposability at the static level and its public disclosure and credibility at the dynamic level. The right holder can achieve effective control over NFT through digital signature technology. [15] This discussion is only about the carrier layer. The right holder may not have disposability over the mapped digital works. Especially in the domestic alliance chain or private chain technology environment, once the operating entity shuts down the network service (such as Tencent’s Huanhe project), the NFT digital collection is at risk of being lost. Some scholars believe that the consequences of NFT digital works being the continuous technical service payment behavior of network operators are “debt certificates”. [16] However, in the public chain technology environment, the digital works mapped by non-fungible tokens are directly stored in the blockchain, such as NFTs based on the Bitcoin Ordinals protocol, or Ethereum NFTs with ENS domain names as metadata, or the mapped digital works are stored in decentralized servers. Non-fungible tokens do not rely on a specific third party for their existence, and there is no specific contractual counterparty. Except for the holder, no specific institution or individual can control the non-fungible tokens. It is not sufficient to characterize them (the carrier layer and the mapping layer) as "debt certificates".
The Service Agreement of OpenSea, a representative overseas industry platform, states: OpenSea is not an encrypted digital token wallet provider, exchange, broker, trader, financial institution or payment processing institution; it helps users discover and directly trade NFTs issued on the public chain, does not host or control NFTs that interact with users, and does not purchase, transfer or sell NFTs; users who use the platform services must use a third-party wallet for user chain transactions; the wallet is not operated, maintained or affiliated by OpenSea, and OpenSea has no control over the content of the user's wallet and cannot retrieve or transfer its content. [17] In the above technical environment, users have exclusive control over the non-fungible tokens purchased on the platform, and the platform is not responsible for any actions or inactions that cause the user's account or wallet to be leaked. Therefore, combined with the technical characteristics of non-fungible tokens based on the public chain and the platform's agreement, it is difficult to regard the subsequent resale of such NFT digital works as a debt transfer. In the alliance chain or private chain technology environment, the non-fungible tokens purchased by users on the platform are generally stored in the account opened by the platform. The data and accounts of these non-fungible tokens are mostly under the absolute control of the platform. Without the permission of the platform, users cannot transfer non-fungible tokens to other accounts not controlled by the platform. The transfer of non-fungible tokens between different accounts on the platform is also strictly restricted by the platform. [18] The non-fungible tokens purchased by users on such platforms require third parties to assume payment obligations (such as continuous technical services of network operators), which have obvious contractual counterparties. On overseas platforms represented by OpenSea, users' non-fungible tokens are stored in accounts independent of the platform (commonly known as wallets), which are exclusively controlled by users, and are more property rights in form.
Secondly, the ownership of the rights of non-fungible tokens in the mapping layer is stipulated in Article 20 of the Copyright Law of the People's Republic of China: "The transfer of ownership of the original work does not change the ownership of the copyright of the work, but the exhibition right of the original works of fine arts and photography shall be enjoyed by the original owner." Non-fungible token transactions will result in the transfer of property rights (carrier layer) (smart contract address changes), but it does not necessarily change the ownership of copyright (mapping layer). The holder holds the private key and controls the token (carrier layer), but is not given the power to exclusively control the digital works in the mapping layer, and cannot prohibit others from accessing the digital works. Unless the transfer of copyright is clearly agreed upon in the transaction rules of the "casting" of non-fungible tokens and the issuer, the copyright of the digital works in the mapping layer will not necessarily be transferred. Therefore, similar to physical works, the purchase of non-fungible tokens does not necessarily legally obtain the copyright of digital works at the same time. As scholars have pointed out, non-fungible token transactions only involve changes in the holder of the metadata of digital works, not changes in the ownership of the original or copied works. The buyer usually obtains the right to access the copy of the work on the non-fungible token platform, but the buyer's holding of the global unique identification code of the work itself has nothing to do with the copyright. [19] When the buyer does not obtain the explicit transfer of copyright from the issuer, he only obtains the ownership of the non-fungible token (carrier layer) and the right to access the genuine digital work (mapping layer).
The "carrier layer" of non-fungible tokens mainly has financial law risks, and the "mapping layer" mainly has intellectual property risks. The "carrier layer" of non-fungible tokens uses blockchain as the underlying technology, which can facilitate transactions and circulation on the encrypted asset trading platform. It has the characteristics of premium, liquidity and volatility in transactions, and it is inevitable to carry financial attributes and related risks. Some scholars believe that because it is built on the blockchain, the development of NFT and its role in the financial system are inseparable from the digital world. [20] The financial law risks of non-homogeneous tokens mainly include violations of financial regulatory laws (policies) and suspected financial crimes. Since the advent of blockchain technology in 2009, the mainstream applications are private crypto asset issuance, trading, circulation, title confirmation and blockchain finance (such as crypto asset exchanges, decentralized lending and stablecoin issuance). Financial law risks in these areas are emerging in an endless stream. [21] It breeds chaos such as illegal fundraising, money laundering, fraud and pyramid schemes, which deviates from financial laws and regulatory policies. The carrier layer of non-homogeneous tokens relies on blockchain and is essentially a type of crypto asset. With the help of tokens as a carrier, the crypto asset is allowed to be exposed to a wider range of buyers and easily transferred on the chain, making some non-homogeneous tokens more liquid, and the digital works they map meet the needs of a wider audience. Digital works may not have investment returns and asset allocation effects, but they are inevitably exaggerated by the platform with the help of blockchain and crypto assets, becoming the main source of financial law risks.
Some scholars believe that NFTs may be used as a new type of money laundering model to launder money, forming a chaotic primary and secondary market. Many consumers have speculated on NFTs as financial investment products. [22] my country's financial regulatory authorities have explicitly banned the trading of virtual currencies (crypto assets), but the policy attitude towards digital assets with financial attributes such as non-fungible tokens is still unclear. The metaverse craze that set off in 2021 is inseparable from the speculation in the capital market. Criminals use concepts such as the metaverse and non-fungible tokens to commit fraud. [23] According to statistics, in 2022, the total global transaction volume of non-fungible tokens was US$55.5 billion, of which 46% of the transaction volume was suspected of speculation and counter-trading, and there was a risk of illegal financial activities. [24] Therefore, in April 2022, the China Internet Finance Association and other institutions jointly issued the "Initiative on Preventing NFT-Related Financial Risks", pointing out that NFTs have risks such as speculation, money laundering, and illegal financial activities, and advocating the de-financialization of non-fungible tokens. [25]
In addition, the content of the mapping layer of non-fungible tokens naturally involves intellectual property issues. In most cases, the hash value of the digital work mapped by the non-fungible token is recorded on the blockchain rather than the work itself, which serves as evidence of the registration of the work. However, the blockchain itself cannot identify the legality and originality of the digital work in the mapping layer. At the same time, the blockchain technology itself cannot identify the identity of the project party and distinguish the similarities and differences between different digital works, which makes some popular projects easy to be counterfeited. For example, someone in China used the NFT pony series created by foreign artist Maya Delia to publish a similar project on a certain platform. The details of the two are almost the same. [26] The non-fungible token created by a professor at an art school was accused of plagiarizing the popular foreign project "Bored Ape" (BAYC). [27] American artist Mason Rothschild used the "Birkin" series of products of luxury company Hermes as a prototype to cast a series of non-fungible tokens called "Meta Birkin", infringing Hermes' trademark rights. [28] The market is full of illegal incidents such as piracy and plagiarism, and many projects are mixed with fakes, infringing on the rights of consumers. Without the permission of the original right holder, some project parties have arbitrarily "cast" and issued non-fungible tokens for specific works, which has become a common form of low-cost infringement in the current industry. Project parties even repeatedly "cast" and issue non-fungible tokens for specific works. The rights related to non-fungible tokens are flawed and their value is improperly reduced. As a result, there are a large number of intellectual property infringements in the field of non-fungible tokens, which impact the legitimacy of property rights.
As a type of virtual commodity, non-fungible tokens mainly rely on domestic and foreign trading platforms to complete marketing, promotion and trading. Most domestic trading platforms have the "power" to "cast", issue, trade and price non-homogeneous tokens. Representative foreign platforms such as OpenSea have the "power" to promote and sell non-homogeneous tokens and have huge traffic in the industry. Therefore, the aforementioned financial legal risks are directly related to platform operators. During the research, the author found that some platforms are suspected of illegal fundraising, pyramid schemes or fraud; the actual controllers of some platforms are unknown, which easily leads to consumers having no way to protect their rights; the prices of non-homogeneous tokens on some platforms are obviously inflated. Due to the general lack of effective external legal supervision, the number and price of non-homogeneous tokens issued based on the alliance chain are full of hidden operations and insider trading. Non-homogeneous tokens are non-standardized virtual assets, and their fair value is difficult to determine, which provides a lot of room for market manipulation by platforms or certain project parties. The founders or employees of some platforms hold some non-homogeneous tokens, strictly control the sales progress of the listing platform, artificially create the illusion of scarcity, or use information advantages to participate in buying and selling in advance. In the absence of effective external regulation, transactions may be jointly manipulated by project parties and platform operators, or exclusively manipulated by operators, to commit fraud, insider trading, or raise prices to sell. In June 2022, federal prosecutors in the Southern District of New York charged Nathaniel Chastain, a former product manager at OpenSea, with insider trading in non-fungible tokens, constituting wire fraud and money laundering. [29] Some project parties hoarded non-fungible tokens in the early stages and raised prices to sell, which seriously endangered market fairness and infringed on the buyer's right to know and property rights. Some platforms teamed up with "dealers" to drive up (or suppress) the prices of specific non-fungible tokens. Some platforms did not strictly verify the real names of users, causing non-fungible token transactions to become a criminal channel for money laundering in disguise. Scholars believe that under the premise of an imperfect legal system, in order to maximize profits, some businesses may use information differences formed by technological advantages to evade supervision. [30] Some platforms have driven non-fungible tokens with low fair value to sky-high prices, allowing consumers who lack risk awareness to take over, which may be suspected of fraud. Some platforms have used the latest developments in blockchain technology to promote equity share transactions of non-fungible tokens, which has a tendency to be illegally securitized and violates financial regulatory laws and regulations. The emergence of legal issues related to intellectual property rights is mainly due to the lack of compliance of trading platforms, the lax review of the digital content mapped by the project party's non-fungible tokens, or even no review, or the failure to identify the project party's person in charge, which objectively induces lawbreakers around the world to steal other people's works at a low cost and "mint" non-fungible tokens for sale, resulting in defects in the intellectual property rights of the mapped digital works. Scholars believe that the trading model of non-fungible tokens makes each digital file uniquely marked, and each copy of a digital work is referred to by a unique string of metadata, which produces the effects of "quasi-tangibility", "uniqueness" and "scarcity". [31] However, in my research and practice, I found that representative platforms such as OpenSea actually adopt a passive review mechanism in the "minting" issuance link, and do not require "minters" to provide copyright certificates related to digital works, and there is almost no technical inspection on the similarity of digital works. The platform's "User Agreement" stipulates that: OpenSea will not make any statements or guarantees about third-party NFT content; users are responsible for verifying the legality and authenticity of NFTs purchased from third-party sellers; OpenSea cannot guarantee that any NFT is always visible and/or can be purchased, sold or transferred; users are solely responsible for any content related to their NFTs. [32] The platform unilaterally and comprehensively exempts itself from responsibility and allows digital content that is similar or even identical to the digital content of others (such as operators within the platform) to be repeatedly "minted" into new non-homogeneous tokens and resold. This is the main reason for the high incidence of intellectual property risks in this industry.
In summary, the legal risks of non-homogeneous tokens are directly related to trading platforms, and timely regulation of their risks is imminent. There are two main operating modes of trading platforms. One is that the platform only provides technical auxiliary services for "casting" non-homogeneous tokens on the chain (such as OpenSea); the other is that the "casting", sale or auction of digital works are all controlled by the platform (such as most domestic platforms). These platforms have dominant power over the initial issuance, sales frequency, pricing strategy, metadata storage method, and whether to open secondary transactions of non-homogeneous tokens. When scholars studied the metaverse, they proposed that it is difficult to prevent and resolve risks by relying solely on the power of market entities. Even the profit-seeking tendency of market entities will increase the probability of these risks, making market forces themselves the cause of these risks. Therefore, it is necessary to prevent and resolve risks through the power of administrative regulation. [33] For this reason, trading platforms are qualified regulatory centers, which mainly involves two aspects: on the one hand, as the subject of regulating both parties of the transaction (operators and consumers on the platform), the regulatory agency urges the platform operator to fulfill its main responsibility as an Internet platform and regulates the illegal behavior of operators on the platform through the platform operator (mainly intellectual property infringement risks); on the other hand, the regulatory agency cracks down on the illegal behavior of the platform operator itself (mainly financial law risks) and promotes the platform operator to bear due legal responsibilities. As scholars have said, the effective management of the transaction order within the platform by the platform operator is the guarantee for the healthy development of the transaction. The platform operator may take unfair actions in management, which will damage the rights and interests of operators and consumers on the platform. [34] Therefore, the platform needs to be regulated and regulated at the above two levels.
Some scholars believe that the issuance of non-homogeneous tokens is more arbitrary, and the issuer no longer bears any obligations after the issuance is completed. In theory, it can choose an anonymous issuance method that cannot be traced back to a specific individual or organization in the real world. It is impossible to verify whether the issuer has the legal entity qualifications, and there is not necessarily a "debtor" with legal entity qualifications. [35] However, most domestic non-homogeneous tokens are issued and traded through centralized platforms. The trading platform has the responsibility and ability to verify the identity of the "minter" (mostly an operator within the platform). Domestic digital collection platforms rely on alliance chains or private chains, which have obvious centralized subject control characteristics. "Minters" have no room to choose open source decentralized projects. Some scholars believe that the vast majority of NFT platforms provide paid services. Those who directly obtain economic benefits from NFT works should bear a higher duty of care. The platform should conduct a substantive review of the information uploaded by users. It only requires users to "check" the various risk warning clauses published by the platform, which does not have the legal effect of third-party exemption. [36] In addition, on-chain transactions in the public chain environment are only relatively anonymous. Cases from law enforcement agencies in China and the United States in recent years have shown that through advanced technical analysis, law enforcement agencies may trace on-chain illegal acts to specific individuals or organizations in the real world. Therefore, the identity of the issuer of a non-homogeneous token project can basically be traced and clarified, and then make it bear the corresponding legal responsibility.
The difficulty in regulating online platforms lies in the fact that the dynamic development of platforms makes legislation unable to keep up with the iterative update speed of business models. [37] The technology in the field of non-homogeneous tokens is developing rapidly. In dealing with legal risks, we should not excessively pursue the thinking process of "everything has a law" and "legal omnipotence", [38] but should think about more effective regulatory approaches. Most domestic platforms provide various services to issuers and consumers, integrating multiple roles such as technical service providers, sellers, metadata storage and custodians, and self-regulatory regulators, and have absolute control over both parties to the transaction and the flow of products. However, some scholars point out that the stronger the platform power, the greater the possibility of abusing private power. The platform may abuse private power unscrupulously, and it is difficult to effectively deal with it only by market competition and industry self-discipline. This will lead to the failure to realize the public nature of the platform well, and reasonable ways must be sought to regulate it. [39]
Platform operators concentrate power in one person and may abuse private power or deliberately reduce their own obligations. For example, the Ant Chain Digital Collection Platform User Service Agreement (20230215 version) stipulates: According to relevant laws and regulations, any user of the Whale Tan platform uploads, posts, publishes or transmits any other text, pictures, personal images, portraits, names, trademarks, service marks, brands, company logos, videos, audio or other information through the platform. The content provider shall bear the responsibility, and the platform does not guarantee the accuracy, integrity or quality of the content. [40] According to Article 41 of the E-Commerce Law, e-commerce platform operators shall establish intellectual property protection rules, strengthen cooperation with intellectual property rights holders, and protect intellectual property rights in accordance with the law. The above-mentioned format clauses are equivalent to unilaterally imposing risk identification obligations and responsibilities in the fields of intellectual property on consumers, almost exempting themselves from all responsibilities. Some platform self-regulatory rules show that operators have neglected their duty of care and allowed some infringements and breaches of contract to occur. Some scholars believe that the Civil Code and other laws stipulate that platform operators have the obligation to prevent and stop infringements, otherwise they should bear the liability of aiding and abetting infringements. Platform operators should bear the responsibility of substantive review of acts of infringement of intellectual property rights on the platform. [41] Taking the platform as the regulatory center from two levels is the key to promoting the healthy development of the industry.
According to Article 3, Article 30 and Article 52 of the "Measures for the Supervision and Administration of Online Transactions", online transaction operators should conscientiously perform their legal obligations and actively assume principal responsibilities; online transaction platform operators shall take measures such as warnings, suspension or termination of services for illegal acts of operators on the platform in accordance with the provisions of laws, regulations and rules or platform service agreements and transaction rules; if the online transaction platform operator fails to take necessary measures, it shall bear joint and several liability with the operators on the platform in accordance with the law. The "E-Commerce Law" requires that the platform should formulate reasonable transaction rules, credit evaluation rules and intellectual property protection rules. In summary, there is sufficient legal basis for the non-homogeneous token trading platform to assume principal responsibilities.
Platform operators have played a leading role in various social functional fields and can be called the "third sector" outside the government. [42] Non-homogeneous token trading platforms are digital organizations supported by emerging technologies such as blockchain, big data, and artificial intelligence. They undertake the public functions of organizing token issuance, maintaining trading market order, and protecting user rights and interests, and have a relatively obvious public nature. As one of the "digital gatekeepers", non-homogeneous token trading platforms have the power to formulate trading rules, review content, and deal with breaches of contract or even illegal activities by operators on the platform. Compared with regulatory and law enforcement entities, platform operators control the entire transaction process, are closer to the governance of illegal or criminal operators on the platform, have a better understanding of each non-homogeneous token detail or user behavior, usually have a complete user behavior portrait, and have greater regulatory capabilities and regulatory advantages. This private platform integrates multiple "powers" and actually assumes the function of a quasi-regulatory agency that regulates micro-market trading behaviors. As scholars have said, the platform is both a market entity participating in market competition and a regulatory entity that regulates illegal and irregular behaviors on the platform. [43] Compared with regulatory agencies, platforms are more likely to discover industry risks, are more capable of responding to and resolving disputes between the two parties (operators and consumers on the platform) and preventing legal risks in a timely manner, and are capable of implementing full-process regulation before, during and after the transaction. Some scholars believe that platform regulation has formed a dual regulatory system with private regulation and public regulation coexisting. Private regulation is the main form of regulation within the platform, while public regulation is the main form of regulation between platforms. In general, private regulation is the main form of regulation, giving full play to the main role of the platform. [44] The downward transfer of regulatory power means that the platform becomes the "co-regulator" of the government. This public-private cooperation plan can make full use of the technical and information advantages of the trading platform itself, effectively regulate the trading market, realize the coordinated regulation of the government and the platform, and greatly improve the efficiency of market supervision.
Some scholars believe that emphasizing the implementation of the main responsibility of the platform is actually requiring the platform to strengthen self-regulation. [45] According to Article 2 of the E-Commerce Law, e-commerce refers to the business activities of selling goods or providing services through the Internet or other information networks. Non-fungible token trading platforms that sell virtual goods through Internet channels should be regulated by the E-Commerce Law. In addition, referring to the "Guidelines for the Classification and Grading of Internet Platforms (Draft for Comments)" and "Guidelines for the Implementation of the Main Responsibilities of Internet Platforms (Draft for Comments)" published by the State Administration for Market Regulation in 2021, non-fungible token trading platforms are essentially online sales platforms that connect people with virtual goods. Their main functions include providing sales services, facilitating transactions between the two parties, and improving matching efficiency. At the same time, they also have some characteristics of financial service platforms, connecting people with funds, including (relying on third parties) providing payment and settlement functions. The "Guidelines for the Implementation of the Main Responsibilities of Internet Platforms (Draft for Comments)" require that platforms engaged in business activities "must safeguard national interests and social public interests", "establish an internal supervision and inspection system", and "assume corresponding security obligations". In summary, the legal responsibilities of Internet trading platforms usually include maintaining fair competition, network transaction security and risk prevention and control, trader identity information verification, platform content management and legality review, establishing fair service agreements and trading rules, natural person privacy and information protection, and protection of the rights and interests of operators and consumers within the platform. [46] However, given the particularity of the non-homogeneous token industry, the focus of the construction of trading platform responsibilities is on regulating risks related to intellectual property and financial law. As mentioned above, the illegal acts of operators within the platform are mainly related to intellectual property infringement, which may cause significant damage to the interests of consumers or third parties. The platform dominates the non-homogeneous token market, protects the rights and interests of consumers, and bears the responsibility of the market "gatekeeper". This requires trading platforms to adopt technical detection methods such as artificial intelligence to actively prevent and eliminate the above-mentioned internal legal risks of the platform. The construction of a pre-examination mechanism, an in-process communication and processing mechanism, an infringement complaint mechanism, and a post-dispute resolution mechanism is the basic way for the platform to assume the above-mentioned responsibilities. In the pre-stage, the platform operator has the basic review obligations such as qualification review and identity authentication of the project parties. It can require the project parties to provide a certain amount of deposit, prepare copyright certificates and other documents for uploading digital works to be minted, fully review the authorization of the original intellectual property rights holder, and require them to disclose whether they are exclusively authorized to issue, so as to protect the consumer's right to know. By requiring the issuer to upload the corresponding rights certificates, including copyright certificates, authorization documents, license documents, trademark certificates, etc., the platform can avoid unnecessary disputes and legal risks in the future. As some scholars have pointed out, the platform (joint issuer) provides consumers with necessary information such as the original author, minter (issuer) and number of copies of non-homogeneous token digital works. [47] In practice, in the domestic "first NFT case" surrounding "Fat Tiger Vaccination", the Hangzhou Internet Court held that the platform should fulfill the responsibilities of general network service providers ("notice-removal" obligations) and should also establish an intellectual property review mechanism to conduct a pre-examination of the copyright of NFTs. [48] Article 1195 of the Civil Code and Article 45 of the E-Commerce Law both provide that when an e-commerce platform operator knows or should know that an operator on the platform has infringed intellectual property rights, it shall take necessary measures such as deletion, blocking, disconnection, termination of transactions and services, otherwise the platform and the infringer shall bear joint and several liability. To this end, platform operators should set relevant clauses in the user agreement to clarify the boundaries of rights and obligations of all parties, exemptions and rights of recourse, and avoid intellectual property infringement by the publisher. The platform can also use technical means to strengthen the detection of copyright legitimacy before the work is uploaded to the chain. Market regulators and legislative bodies should scientifically and reasonably set platform responsibilities based on the platform's status, comprehensively consider user rights, platform regulatory capabilities and regulatory costs, and other factors. In practice, the diversified operating models of platforms make their role positioning vague and the boundaries of responsibilities unclear. Therefore, it is necessary to distinguish the types of platform operations, divide different main responsibilities for different types of trading platforms, achieve refined governance, and set corresponding standards for duty of care based on the types of platforms. [49] For platforms that only provide non-fungible token trading services, in addition to fulfilling the “notice-and-takedown” obligation, they should also bear the responsibility of reviewing the legality of their digital content in advance. For platforms that provide various services such as non-fungible token casting, issuance, trading or auction, in addition to the above responsibilities, they should also optimize the negotiation mechanism in the stage of obtaining copyright owner authorization to ensure that the original right holder obtains the only authorization, avoid diluting the scarcity of non-fungible tokens, and avoid affecting consumer property rights. In terms of the type of right object, during the prior review process, the platform can distinguish the type of rights in the non-fungible token mapping layer in advance based on whether the transaction stipulates the transfer of ownership and copyright of digital works in the mapping layer, as well as the specific rights and uses of the copyright commercial license, and review the corresponding authorization license certificate to ensure that the “caster” has the complete authorization of the above-mentioned copyright owner, ensure the long-term storage of non-fungible token-related data, and protect consumer rights.
During the interim stage, according to Article 1195 of the Civil Code and Article 23 of the Regulations on the Protection of Information Network Communication Rights, platform operators should review whether users who apply for non-homogeneous token casting have provided preliminary evidence such as intellectual property manuscripts, originals, legal publications, copyright registration certificates, and certificates issued by certification bodies, as well as the authenticity of such evidence, to prove that they are the real right holders or have been authorized by the original right holders to exercise relevant rights and interests. If infringement occurs during the issuance, promotion, sale and resale of non-homogeneous tokens, the platform can increase the review dimension, suspend sales and circulation, and issue public statements. In the future, platforms or industry associations can also formulate detailed rules to clarify and refine specific requirements within the framework of legal norms based on factors such as the review needs and types of intellectual property rights in different scenarios. In the post-event stage, when the operators on the platform infringe or commit fraud, the platform operators should immediately remove the non-homogeneous tokens and perform necessary measures, such as the obligation of "notification-removal", disconnect the infringing works on the blockchain and put them into the address black hole to stop the infringement; when fraud is involved, the deposit of the project party can be frozen to perform the subsequent compensation liability. The platform or industry association builds its own dispute resolution mechanism, and consumers hand over the dispute to the platform for handling first. If they are dissatisfied with the platform's handling, the non-homogeneous token dispute resolution mechanism organized by the industry association or local financial supervision and administration bureau intervenes. In addition, the judicial organs reasonably define the legal responsibilities of the platform in specific cases, improve the post-event accountability mechanism, and provide a demonstration role for the industry. For example, the Hangzhou Internet Court pointed out in the judgment document of the "Fat Tiger Vaccination" case that the platform should bear joint and several legal liability for the infringement caused by the issuance of non-homogeneous tokens due to failure to fulfill its prudent obligations. [50]
Current regulatory principles need to be further optimized. Regulators need to recognize the important value of non-fungible tokens in the fields of digital art, culture and commerce, set regulatory principles in a scientific and reasonable manner, focus on preventing financial legal risks generated by platforms, and promote platform operators to protect consumer rights. Regulators are committed to balancing the relationship between innovation and regulation, promoting both risk governance and encouraging development. We look forward to innovation, but we must also be wary of the unexpected consequences of innovation. Cutting-edge technology contains risks, but also has great positive value to society. We should be wary of simply adopting a "one-size-fits-all" policy. Blockchain regulatory policies, including non-fungible tokens, should not pursue a "ban-type" model for a long time. [51] A healthy market regulatory path should not be limited to setting a "zero risk" regulatory goal. In the development of NFTs, their attributes should not be identified as "all or nothing", but should allow for their diverse possibilities, and find a balance between protecting private property interests and preventing public financial risks. [52] While adhering to the bottom line of financial security, appropriately relaxing the degree of financialization of non-homogeneous tokens will help my country to meet the in-depth application of the global "metaverse order construction" and will also help my country's financial rule of law and global financial governance to form a good interaction. [53] Other scholars believe that NFT is the core asset of Defi (blockchain decentralized finance). For its financial function, it should be guided to play a reasonable role within a certain range, rather than being banned. Under the influence of my country's policies, users are not allowed to transfer NFTs again after the first transaction on the platform, which affects the value storage and circulation functions of NFTs. While preventing its securitization, it should be allowed to flow freely between specific entities, allowing NFTs to be traded twice or even multiple times. [54]
From the author's practical research, in recent years, the financial risks of the industry mainly come from the platform operators themselves. The author suggests establishing a regulatory path for trading platforms with consumer rights protection as the core. In order to prevent financial risks such as money laundering, fraud, pyramid schemes, insider trading and illegal fundraising, regulatory agencies focus on regulating trading platforms and require them to establish trader identification mechanisms and anti-money laundering mechanisms in accordance with the law to combat illegal activities such as insider trading and price gouging. Therefore, non-fungible tokens must comply with anti-money laundering regulations, which means that platforms are required to conduct real-name verification of users, store necessary non-fungible token transaction records, and fulfill anti-money laundering obligations. [55]
The combination of non-fungible tokens and digital works has the attributes of virtual commodities and inevitably has the nature of investment. Most buyers of non-fungible tokens are newcomers to the industry. Some new consumers are influenced by the promotion of trading platforms and the industry boom and only pay attention to the price fluctuations. Non-fungible tokens involve a more complex rights structure. The transaction rules and authorization terms of different platforms vary greatly. Ordinary consumers are unable to distinguish the rights structure of non-fungible tokens and are not concerned about the important connotations of the digital works mapped by them, such as the content, attributes or historical significance of the digital works, as well as the distribution of responsibilities between the platform and itself. To measure the value of non-fungible tokens, buyers need to pay attention to what rights they have over the digital works mapped by non-fungible tokens, evaluate the deviation between their intrinsic value and market price, and judge the scarcity of their content and the degree of artistic originality. Some scholars believe that NFT is only a token ID with only specific marking or mapping functions and no appreciation value. A large number of digital works are stored off-chain and are easily tampered with. It can be said that the price fluctuation risk of NFT digital works is higher than that of ordinary debts. If the public has such an understanding of NFT digital works and is aware of the risks, they will naturally stay away from irrational investment behavior. [56]
For most consumers, it is extremely important to popularize basic knowledge of the industry and financial risk education. The original copyright owner of the digital work may grant the buyer of the non-fungible token some copyright property rights, but copyright is a "bundle of rights" involving more than 10 specific rights. Regarding the transfer terms of various non-fungible token rights, the content of the copyright property rights or other rights that the buyer is allowed to transfer may be very different. Some scholars believe that it is difficult to say how much use value NFT digital works have. Currently, the digital works that are "cast" as NFTs are basically works of art. Their value does not lie in practicality, or even mainly in being appreciated by people, but in the market appreciation expectations and liquidity brought by scarcity. [57] This is mainly for the current situation of some non-fungible tokens in China. Looking at the value of non-fungible tokens at home and abroad, there is diversity. The aforementioned "casting" as non-fungible tokens such as exchange media, event tickets, and business cards that allow entry to parties has certain practicality. In addition, Yuga Labs, the company that owns the famous non-fungible token project "Bored Ape", grants the buyer the right to use, copy and display the purchased "Bored Ape" digital works, as well as the right to create derivative works based on the artwork, such as producing and selling T-shirts displaying the artwork, and the right to own or operate third-party websites or applications involving "Bored Ape", etc. [58] "Bored Ape" holders can also participate in specific gatherings and obtain rights such as airdropped metaverse virtual plots.
Different from this kind of broad authorization, such as the agreement made by JD.com when selling non-fungible tokens on the blockchain ("Zhizhen Chain") in December 2021, [59], the original rights holders of domestic non-fungible tokens often only authorize buyers to enjoy limited rights to access specific digital works. The agreements of other platforms are similar. For example, the NFTCN Platform Service Agreement stipulates that after the transaction of digital works is completed, the user has the right to possess, use, transfer and dispose of the digital works, but the intellectual property rights of the digital works are still owned by the rights holder of the intellectual property rights of the works; the intellectual property rights of digital works are not transferred or shared due to the transaction of digital works. [60]
The rights of the buyers of this type of non-homogeneous tokens are mainly limited to limited rights such as access to the mapped digital works and non-commercial display. Influenced by the rights structure characteristics of the aforementioned non-homogeneous tokens, the buyers usually obtain a virtual equity certificate in the public chain environment, and have exclusive and dominant rights to the carrier layer. According to the agreements of the above-mentioned domestic platforms, in the private chain or alliance chain environment, the buyers do not obtain exclusive rights to the carrier layer, and do not necessarily obtain the copyright of the digital works in the mapped layer. At this time, the buyer's "ownership" of the digital work is likely to be a fictitious legal imagination.
In addition, the original copyright owner may repeatedly "cast" and sell non-fungible tokens that map the same digital work on different trading platforms without violating the user agreement. This will bring two problems. First, non-fungible tokens are cast and sold multiple times on different platforms, greatly diluting their market prices and negatively affecting the buyer's expectations of property rights or future investment benefits; second, some buyers do not understand the complex rights structure of non-fungible tokens, and have no time to read or understand the transaction rules and authorization terms in detail. After purchasing non-fungible tokens, they rashly engage in commercial development and utilization related to digital works, resulting in breach of contract and infringement. Non-fungible tokens can be used as proof of appreciation of genuine digital works, and can be used as limited proof of copyright or ownership in digital work transactions. However, this proof of rights may only mean that the digital work mapped by the non-fungible token is a genuine work, and the buyer is qualified to access the genuine digital work. These complex rights structures and legal theory knowledge often exceed the understanding of most ordinary consumers. The author suggests that market regulators promote trading platforms to continuously warn of risks, promote platforms to popularize industry knowledge and investment risk education for consumers, and refer to the securities investment market to assess consumers' investment risk preferences and set appropriate entry thresholds for qualified investors to protect their rights and interests. Regulators can further promote platforms to popularize relevant legal knowledge, carry out legal risk education, eliminate cognitive differences or misunderstandings of ordinary buyers, help ordinary buyers understand the rights structure of non-fungible tokens, avoid causing property losses to buyers, and avoid investment risks.
Some scholars argue that financial consumers are in a more vulnerable position than ordinary consumers due to factors such as the intangible nature of financial transaction targets, the informationization of transaction content, and the highly persuasive nature of sales methods, and there is a need for special protection for financial consumers. [61] In the field of non-fungible tokens, consumers generally find it difficult to understand the complex technical architecture, rights structure, and details of transfer contracts of non-fungible tokens. In the face of advertising and investment persuasive statements from trading platforms, they do not have the corresponding bargaining power. Consumers are in many disadvantages in transactions and may even be influenced by various persuasive propaganda to make irrational purchase impulses. The legal and regulatory system should ensure information symmetry, allow consumers to obtain all available information, and based on the goal of protecting consumer rights, connect all chains covering the "minting", issuance, promotion, trading and dispute resolution of non-homogeneous token products, and integrate the specific rules of regulatory agencies to regulate the platform. This includes the trading platform operator requiring the project party to provide detailed descriptions of each project and display them to potential consumers on the platform, such as the connotation, innovation and issuance quantity of the digital works mapped by the non-homogeneous token, the speculation risks of non-homogeneous tokens, and the description of the possible loss of consumer property rights. By strengthening the duty of care of the trading platform, the regulatory agency requires the trading platform to be responsible for improper persuasion.
Finally, considering that consumers are often in a weak position in the process of purchasing and investing in non-homogeneous tokens, the author suggests that on the one hand, the regulatory agency can set up a consumer complaint and feedback mechanism to target the financial risks of the industry and crack down on illegal activities such as black-box operations and insider trading by platform operators; on the other hand, the review of the platform's self-discipline rules should be strengthened. Researchers believe that when disputes arise between platform operators and operators within the platform and consumers regarding the basis for platform self-regulation and the rationality of specific management measures, the people's courts should review the basis, measures and procedures for management in accordance with the relevant provisions of the standard clauses in the Civil Code and other laws. [62] The formulation of self-regulatory rules of trading platforms may have the appearance of equal consultation in form, but consumers and operators within the platform have basically no say in the formulation of rules and can usually only obey the rules unilaterally formulated by the trading platform. Therefore, trading platforms enjoy supreme authority within themselves, but there is no effective supervision. In the face of the aforementioned problems such as the platform deliberately reducing its own obligations and abusing private power, the self-regulatory rules of trading platforms should be reviewed by judicial institutions in terms of not harming the legitimate rights and interests of economic operators and consumers within the platform and upholding transaction fairness.
The legal risks of non-homogeneous tokens are mostly related to the structural characteristics of their carrier layer and mapping layer. The trading platform organizes and promotes the circulation of non-homogeneous tokens, and provides a technical environment for their rights structure characteristics and operation. Therefore, these risks are mainly concentrated on the trading platform. In view of the rapid development of the industry worldwide, the regulatory capacity of regulators is limited. In order to balance the need for innovation and risk control, regulators need to focus on the platform as a regulatory target. On the one hand, as the subject of regulating both parties to the transaction, platform operators focus on fulfilling the obligation of legality review of digital works and preventing intellectual property infringement; on the other hand, regulators list platform operators as the focus of regulation, with the protection of consumer rights as the orientation, prevent the platform from breeding financial legal risks, and crack down on illegal activities such as insider trading.
In general, non-homogeneous tokens are still in the early stages of development, and market regulators should urge platform operators to fulfill their legal responsibilities. On the one hand, trading platforms should not deliberately reduce their obligations, especially avoid unilateral exemption of their own responsibilities, or even impose all risk identification obligations in the field of intellectual property rights on consumers; on the other hand, trading platforms should exercise private power reasonably and prudently, and mediate interest disputes between economic operators and consumers on the platform in an objective and fair position. Through iconic cases such as "Fat Tiger Vaccination", judicial organs have conducted necessary reviews on the legality of platform self-discipline rules. In the future, some cases can be elevated to guiding cases at an appropriate time to provide effective demonstration and guidance for interest disputes in emerging fields in the context of a temporary vacancy in the corresponding legal system supply. Market regulators and legislators take the platform as the regulatory center, take the prevention of financial risks and the protection of consumer rights as the main line, and scientifically and reasonably set the responsibilities of platform operators. With the in-depth development of the field of non-homogeneous tokens, the public influence of some leading platforms will continue to expand. Market regulators and platforms deepen cooperative supervision, manage risks, and solve the problems caused by market failure, regulatory failure and rule gaps. In this process, trading platforms and market regulators, as private forces, have become entities that jointly bear public responsibilities, and this regulatory model will also provide sufficient reference and useful inspiration for the legal risk prevention and control of other cutting-edge technology industries.
[1] Wang Qicai: "Theoretical Positioning and Basic Framework of Metaverse Governance Legalization", China Legal Science, 2022, No. 6.
[2] Chu Meng and Yi Jiming: "NFT Copyright Works Trading: Legal Risks and Ways to "Break the Deadlock", Editor's Friend, 2022, No. 8; Tao Qian: "On the Legal Implications of Non-homogeneous Tokenized Transactions of Digital Works", East China Law, 2022, No. 2.
[3] Wang Jiangqiao: "Copyright Protection and Platform Responsibility under the NFT Trading Model", Financial Law, 2022, No. 5.
[4] Ruan Shenyu: "On the Property Rights of NFT Digital Assets: From the Perspective of Rights Bundles", Zhejiang Social Sciences, No. 3, 2023.
[5] Su Yu: "Legal Nature and Risk Governance of Non-Fungible Tokens", East China Journal of Law, No. 2, 2022.
[6] Wang Qian: "On the Legal Characterization of NFT Digital Works Transactions", East China Journal of Law, No. 1, 2023.
[7]Evans, Tonya M. Cryptokitties, Cryptography, and Copyright, AIPLA Quarterly Journal, Vol.47: Iss.2, August 2019, pp.219-266.
[8]Fisher, K. Once upon Time in NFT: Blockchain, Copyright, and the Right of First Sale Doctrine, Cardozo Arts & Entertainment Law Journal, Vol.37: No.2, 2019, pp.629-634.
[9]Marinotti, Joao, Possessing Intangibles, Northwestern University Law Review, Vol.116: No.5, 2022, pp.1227-1282.
[10]Fairfield, Joshua . Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property, Indiana Law Journal, Vol.97:Iss.4, 2022, pp.1261-1313.
[11] Wu Yikai: “Research on the Attributes and Regulatory Construction of Non-Fungible Tokens from the Dimension of Financial Law”, Shanghai Finance, No. 11, 2022.
[12] For related examples, see https://ordinals.com/inscription/e7454db518ca3910d2fl7f41c7b215d6cba00f29bdl86ae77d 4fcd7f0ba7c0eli0, accessed on July 20, 2024.
[13] Chang Qia and Liu Qiushan: Metaverse, CITIC Press, 2022, p. 139.
[14] Li Yizhu: Research on the Legal Attributes and Transaction Relationship of NFT Digital Works, Tsinghua Law Review, No. 3, 2023.
[15] Guo Peng: Legal Characterization of NFT Digital Collection Transactions under the Principle of Functional Equivalence - On the New Path of Including Virtual Property in the Adjustment of Property Law, Modern Law Review, No. 6, 2023.
[16] Li Yizhu: Research on the Legal Attributes and Transaction Relationship of NFT Digital Works, Tsinghua Law Review, No. 3, 2023.
[17]Terms of Service, https: /opensea.io/tos, accessed on April 4, 2023.
[18]For example, the Ant Chain Digital Collection Platform User Service Agreement (20230215 version) stipulates that without the written consent of the platform, users shall not transfer the rights and obligations under this agreement to a third party; the NFTCN Platform Service Agreement stipulates that users should understand and agree that when the service is terminated, the NFTCN platform can permanently delete the user’s data on the NFTCN platform from the server.
[19]Zhang Jinping: “The Metaverse’s Challenge and Response to Copyright Law”, published in “Financial Law”, No. 5, 2022.
[20] Wu Yikai, Li Guoan, and Wang Jianxuan: “Financial Attributes of Non-fungible Tokens and Possible Judicial Recognition”, Journal of Guangdong University of Finance and Economics, No. 3, 2023.
[21] Deng Jianpeng: “Legal Perspective of Blockchain: Problems and Paths”, Academic Forum, No. 3, 2023.
[22] Wu Yikai: “Research on the Attributes and Regulatory Construction of Non-fungible Tokens under the Dimension of Financial Law”, Shanghai Finance, No. 11, 2022.
[23] Ouyang Rihui and Li Xiangyu: “Theoretical Mechanism and Evolutionary Logic of Metaverse Finance”, Journal of Shaanxi Normal University (Philosophy and Social Sciences Edition), No. 2, 2023. [24] See Crypto Slate, 27 stats about NFTs in 2022—who are the big winners? https://cryptoslate.com/27-stats-about-nfts-in-2022-who-are-the-big-winners/, accessed on March 22, 2023. [25] See China Internet Finance Association: "Proposal of China Internet Finance Association, China Banking Association and China Securities Association on Preventing NFT-related Financial Risks", https://www.nifa.org.cn/nifa/2955675/2955763/3014136/index.html, accessed on March 23, 2023.
[26] “Domestic NFT Bought “Fake” Works - Have You Been Exploited by NFT?”, https://www.sohu.com/a/530814469_121194864, accessed on August 5, 2024.
[27] “CAFA Teacher Accused of Plagiarizing the Work “Boring Ape”, Many Experts: Plagiarism and Imitation Existed”, https://www.thepaper.cn/newsDetail_forward_16627715, accessed on May 1, 2023. [28] Herèms International v, Rothschild, https://www.loeb, com/zh-hans/insights/publications/2023/02/hermes-international-v-rothschild, accessed on August 1, 2024. [29]Ex-OpenSea Manager’s Trial Begins in First Alleged NFT Insider Trading Scheme, https://gizmodo.com/opensea-nft-insider-trading-crypto-blockchain-1850368156, accessed on May 16, 2023; Disgraced OpenSea manager arrested for insider trading, https://www.theverge.com/2022/6/1/23150429/opensea-insider-trading-nathaniel-chastain-arrested-homepage-nfts, accessed on May 17, 2023. [30]Fang Huiying: “Regulatory Dilemma and Solution to New Crimes of Manipulating Securities Markets”, Journal of East China University of Political Science and Law, No. 1, 2022.
[31] Tao Qian: “On the Legal Implications of Non-homogeneous Tokenized Transactions of Digital Works”, Journal of East China University of Political Science and Law, No. 2, 2022.
[32] Terms of Service, https://opensea.io/tos, accessed on April 4, 2023.
[33] Huang Pei: “Administrative Regulation Path of Metaverse: A Framework Analysis”, Journal of China Legal Science, No. 6, 2022.
[34] Wu Teng: “Judicial Review of Self-regulatory Behavior of E-commerce Platforms”, Journal of Jinan University (Philosophy and Social Sciences Edition), No. 10, 2023.
[35] Su Yu: “Legal Nature and Risk Governance of Non-Fungible Tokens”, Journal of East China Law, No. 2, 2022.
[36] Zhao Lei: “Legal Regulation of NFTs: A Discussion on the “Fat Tiger Vaccination Case””, Journal of Legal Application, No. 11, 2023.
[37] Song Yahui: “Dynamic Regulation Theory of Internet Platforms”, Journal of Shanghai University of Political Science and Law (Legal Forum), No. 2, 2023.
[38] Deng Jianpeng: “Rational Thinking on the Fever of Compilation of the Chinese Civil Code”, Journal of Nanchang University (Humanities and Social Sciences), No. 3, 2019.
[39] Liu Quan: "The Publicity of Internet Platforms and Its Realization - From the Perspective of Legal Regulation of E-commerce Platforms", Journal of Legal Studies, No. 2, 2020. Other scholars have pointed out that the main management functions of the platform include formulating rules, allocating rights and obligations, and resolving disputes. See Li Yiran: "Internet Platform Governance: The Self-creation of Rules and Their Operational Boundaries", Shanghai People's Publishing House, 2021, p. 15.
[40] The "Ant Chain Digital Collection Platform User Service Agreement" (20230215 version) stipulates that under no circumstances shall the Whale Tan Platform be responsible for any content, including but not limited to any errors or omissions in any content, and any losses or damages derived from any content published on this platform. The "NFTCN Platform Service Agreement" also stipulates that the platform does not guarantee that the works uploaded by each user have copyright or authorization from the copyright owner, and users need to identify whether the works on the platform are original works. The platform does not bear any responsibility for losses caused by users purchasing infringing works.
[41]Wu Teng: Judicial Review of Self-regulatory Behavior of E-commerce Platforms, Journal of Jinan University (Philosophy and Social Sciences), No. 10, 2023.
[42]Li Yiran: Governance of Internet Platforms: The Autopoiesis of Rules and Their Operational Boundaries, Shanghai People’s Publishing House, 2021, p. 69.
[43]Liu Quan: On the Subject Responsibility of Internet Platforms, Journal of East China University of Political Science and Law, No. 5, 2022.
[44]Li Yiran: Governance of Internet Platforms: The Autopoiesis of Rules and Their Operational Boundaries, Shanghai People’s Publishing House, 2021, p. 34.
[45] Liu Quan: On the Main Responsibilities of Internet Platforms, Journal of East China University of Political Science and Law, No. 5, 2022.
[46] For a detailed discussion of the relevant responsibilities and obligations of non-homogeneous token trading platforms, see Cheng Xiao (ed.), Research on Legal Issues of NFT Digital Artworks, China Legal Publishing House, 2023, pp. 64-71.
[47] Wu Yikai: Research on the Attributes and Regulatory Construction of Non-homogeneous Tokens under the Dimension of Financial Law, Shanghai Finance, No. 11, 2022.
[48] See the Civil Judgment of Hangzhou Internet Court (2022) Zhejiang 0192 Minchu No. 1008.
[49] Si Xiao: “The Establishment of Intellectual Property Duty of Attention of Network Service Providers”, Journal of Legal Science (Journal of Northwest University of Political Science and Law), No. 1, 2018.
[50] See the Civil Judgment of Hangzhou Internet Court (2022) Zhejiang 0192 Minchu 1008.
[51] Deng Jianpeng and Ma Wenjie: “Legal Thinking and Optimization Approaches for Virtual Currency Regulation – Also on the “Ban-type” Supervision of Financial Technology”, Journal of Shaanxi Normal University (Philosophy and Social Sciences Edition), No. 3, 2022.
[52] Wu Yikai, Li Guoan and Wang Jianxuan: “Financial Attributes of Non-fungible Tokens and Possibility of Judicial Recognition”, Journal of Guangdong University of Finance and Economics, No. 3, 2023.
[53] Wu Yikai: "Research on the Attributes and Regulatory Construction of Non-fungible Tokens under the Dimension of Financial Law", Shanghai Finance, 2022, No. 11.
[54] Zhao Lei: "Legal Regulation of NFT - Talking about the "Fat Tiger Vaccination Case", Legal Application, 2023, No. 11.
[55] Li Jing: "Metaverse Non-fungible Token Governance Model: Self-Governance, Cooperative Governance and Functional Supervision", Electronic Government, 2023, No. 10.
[56] Li Yizhu: "Research on the Legal Attributes and Transaction Relationship of NFT Digital Works", Tsinghua Law Review, 2023, No. 3.
[57]Wang Qian: "On the Legal Characterization of NFT Digital Works Transactions", published in "Eastern Law Journal" No. 1, 2023.
[58]Kentucky, M. D. M. Transfers and Licensing of Copyrights to NFT Purchasers, Stanford Journal of Blockchain Law & Policy, Vol.6.1, 2023, p.133.
[59]The agreement states: The intellectual property rights or other rights of the digital collection belong to the issuer or the right holder. Unless otherwise authorized by the issuer or the right holder, you may not use the digital collection for any commercial purpose... Do not speculate or trade digital collections over the counter.
[60]https: //www.nftcn.com/pc/#/Notice_deta_user_f, accessed on July 8, 2023. The Whale Tan platform stipulates in the Ant Chain Digital Collection Platform User Service Agreement (20230215 version) that users have the right to enjoy the browsing, purchase, sharing, transfer, dispute resolution, order management, access, appreciation, display, information viewing and other information technology services of digital collections on the platform; the copyright of digital collections is owned by the issuer or creator; unless the copyright owner has obtained written consent, users may not use digital collections for any commercial purpose.
[61] Yang Dong: "On the Definition of the Concept of Financial Consumers", published in "Lawyer" No. 5, 2014.
[62] Wu Teng: "Judicial Review of the Self-Discipline Management Behavior of E-commerce Platforms", published in "Journal of Jinan University (Philosophy and Social Sciences Edition)" No. 10, 2023.
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