The Metaverse represents a criterion shift in the manner in which the Internet will be perceived. However, it is still incomprehensible and has not been explored enough, including the conceptualization of laws in the virtual world and their operations.
The term was first coined in by the author Neal Stephenson in his book Snowcrash in the year 1992. The book was a dystopian science fiction work which referred to a virtual reality world. Although the concept started picking up steam after Facebook revealed that its parent company now had a new name ‘Meta’ edging closer to the metaverse vision the brand has been moving towards, in the hopes of transfiguring the internet experience entirely. With metaverse platforms like HyperVerse Decentraland, Nakamoto, Cryptovoxels now gaining traction and Facebook shifting its strategy by focusing on metaverse has accentuated its presence.
Law and the Metaverse
Markedly, application of existing laws, as well as prospective construction of contemporary laws, in the metaverse is unascertained. Sporadically, existing laws may distinctly conform. In other cases, they may evidently be disconcerting. The current laws may prove insufficient to tackle perplexing issues. Absence of new laws and regulations are bound to leave the courts baffled to manoeuvre their tasks. The purview of implication of laws in the Metaverse is horizonless, thereby beguiling innumerous legal issues.
What could be the Legal Issues?
Intellectual property:
It is sure enough that the activities on the Metaverse may involve transgression of Intellectual Property Laws. Non-Fungible Tokens (NFTs) encompassing Intellectual Property may be minted without the consent of its creator. Metaverse and other Web 3.0 projects have already seen a number of intellectual property disputes arise. In June 2021, Roc-A-Fella sued Damon Dash, its Co-founder, for trying to mint and sell the copyright for Jay-Z's album ‘Reasonable Doubt’
In fact, Metaverse fundamentally could entice challenges that existing laws do not envision. For instance, determining the identity of the creator.
This is because, often such work results from a decentralized collaborative process. This process is conducted by an anonymous character which is termed as an ‘Avatar.’ Additionally, the categorisation of Digital Assets is unclear as per the current laws. Furthermore, cases related to infringement are set to increase in numbers in the view of the fact that detection of identity will be a complicated process.
The crux of the issue is that the current framework relies on a centralized system consisting of regulators and other controlling bodies. On the contrary, Metaverse is a building block of decentralized processes.
Digital assets—including cryptocurrencies, stablecoins, tokens, and non-fungible tokens (NFTs)—are items of value that exist only in digital form. The generation of new digital assets, such as the ones documented via NFT, have already elevated the prevailing intellectual property issues. Numerous Licensing models are being worked on. For example a limited license for personal usage to NFTs.
The traditional intellectual property rights may be challenged at every step along with there being a need for analysing the ambit of usage of each right within a Metaverse.
Finances:
Application of Contract Law and Security Law may collide in cases where blockchain assets are into the picture. Traditional regulations may be applicable to virtual assets like NFTs leading to complications in generating contracts and regulating other relevant activities.
The cryptocurrencies and tokens which may be used in the metaverse will make the applicability of security and other laws complex. The scope and applicability of these laws to NFT projects and especially a certain categories of projects are currently leading to a lot of ambiguities. With more audiences engaging in the virtual world and the legal void being present, the user vulnerability will increase.
Taxation:
The regulatory authorities and laws have elucidated that profit derived from cryptocurrencies is taxable and that they constitute a property. However, this has lead to more compounded issues pertinent to the purchase and sale of such assets and the applicability of taxes alike. An indistinguishable set of issues have emerged in the case of NFTs, Numerous Cryptocurrency exchanges have had to cater to authorities seeking information for identification of transactions and collection of income taxes, It won’t be a surprise for metaverse projects to be targeted in similar a manner. There is no set of guidelines or laws that specify the manner in which tax will be applicable to NFTs.
Crime:
The legal limitations, controllers of the same, parameters and other regulations are still unclear. Numerous users have filed lawsuits in case of violation of terms against other users. The lawsuits aren’t limited to transactional issues and violations of terms.
A beta teaser, in November 2021, made allegations that she was groped in the Metaverse VR platform in a meeting space called plaza. In its statement about the incident, Meta pointed to its “Safe Zone” feature, which allows users to place a block against interaction with other users. However, the company admitted that it needs to work on making the feature “trivially easy and findable,” as stated by the President of Horizon.
The criminal and civil issues in the Metaverse will be more parallel to the real world. Which draws the possibility of all the wrongs happening in the real world, making their place in the digital world too. All of this happening on the global scale have made the need for a structured contract and rigid terms.
Cybersecurity:
One of the major concerns in these projects is cybersecurity and privacy issues apposite to it. The collection, usage and transmission of personal data ranging from the most rudimentary level of information to the most indispensable ones. There is a need to generate and implement a new set of privacy policies.
The edifice will become more complex and multi-layered with more jurisdictions passing fresh comprehensive privacy laws. Companies and individuals will have to protect themselves from third party attacks that could impact or even alter data, including information systems.
Bringing in regulations for disclosures is a requisite.
The very nature of metaverse platforms makes them dictate for more personal data as compared to what is collected in the current Web 2.0 world. For instance, a metaverse platform accessed through a haptic suit will provide information on the users. Appropriate regulation and legal frameworks will need to be developed to address this excessive floating of data.
Geographical Boundaries and Laws:
Metaverse platforms are bound to have policies and procedures of their own to regulate conduct. This will include a wide range of issues including data accessibility or even inappropriate speech for that matter. Metaverse platforms, Cross country boundaries and their operations, applicability of national laws, and prosecution of offences committed will be influenced by the operation of laws in various nations.
Metaverse will have laws drawn upon the laws of various countries in which these respective relevant platforms operate. This process is very similar to the manner in which social media platforms or search engines today operate. However the scope of both these platforms are largely different. In fully functional digital worlds, an internal compliance of policy and procedures will be required consistently.
These will interact and overlap with the national as well as the state laws in a much wider array of sectors as compared to the current set of Internet platforms. Metaverse being a platform gravitating people on a global scale, the laws here and their role in law making and their impact in a standard setting will be profound.
Contracting:
It is a barefaced fact that the digital world will be functioning on smart contracts. Smart contracts are blockchain based contracts, popularly built on the Ethereum blockchain or variants thereof. Smart contracts have hard coded rules and they are bound to become streamlined in the contracting system in the Metaverse.
It is still in an incipient stage. Further along in their development, they could be functioning in an automated manner based on conditional logic without the need for any kind of human intervention. Conditional logic will effect contractual upshot. Blockchain technology is a permanent digital ledger thereby refusing compliance costs as a result of there always being a record of agreements. Smart contracts are increasingly becoming popular in the physical world along with the digital one, thereby easing the streamlining process.
Interpretation:
These are just a few of the many legal areas that may be sparked by the digital world. Although still in its infancy stage, the metaverse is set to bring in changes at the fundamental level itself and change the way in which the world will perceive the Internet The point-and-click experience is set to transform entirely into forming a world of its own. In the Metaverse, Web 3.0 technologies will be used, including advances in the in hardware systems and blockchain, thereby transforming lives so much so that it could replace a lot of activities from the physical world.
The Metaverse and the digital world bring with them an array of possibilities and bring a wide range of novel legal issues that will need the formation of a proper legal framework for smooth operations. At this stage, laws and legal framework has so far only been grazed on the surface. With an increase in the user adaption, the development and evolution of legal frameworks in the digital world is inevitable. A revolution in the governance and frameworks will soon be a reality, setting the current frameworks and various other operations of the physical world to become history.
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