Regulations are coming swiftly for Axie Infinity,Bored Apes, and other projects.
The metaverse is here
The metaverse is live and if you’ve been following Web3 and the metaverse , you would know that the metaverse is a futuristic version of the internet, which will feature a digital economy, immersive VR and AR features. This technology is getting so much attention that many conservatives suggest that by 2024 it could be valued up to $800 billion companies, such as Microsoft, Nvidia, Nike, Gucci, Adidas, and many others have made splashes into the metaverse.
Eyes on the metaverse
Now ,with that type of money on the line, you can expect the government to want to put their hands in the pot as well. More scrutiny is coming from financial regulators that are increasingly tech-savvy. Some meta-verse projects have been pushing questionable monetization schemes on their users before launching a real experience. This can be seen as illegal or very questionable to say the least.
One such example of this type of questionable monetization can be seen with a metaverse real estate. Many companies like big time games are selling their land in the metaverse before they open up access to the game. Another project Solice has been selling their land and their NFT’s without a full release of the product, raising questions as to whether the platform is solvent or not.
Usually the United States Securities and Exchange Commission doesn’t involve itself unless retail investors are the victims of predatory practices. Sometimes it is not all to clear what a security is- but in the case of the metaverse land sales should generally be considered as securities under United States law.
In all fairness
Axie Infinity and other play to earn games, show a speed at which Metaverse projects can create economies that become worth multi billions of dollars. The size of these games create a necessity for internal controls and monetary policies that should be similar to multinational banks or small countries. According to US law, they should be required to have compliance officer to coordinate with government regulators, and should conduct KYC or no your customer protocols for transactions that are large.
There is no bodily harm that can be caused in the metaverse, but, there is definitely a lot of financial harm that has already been caused. This can be tracked back to rug pulls or other scams involving NFTs and other digital land sales that have gone awry.
Other losses involve hacks, or exploits that have seen traditional, or retail investors lose millions upon millions of dollars. The board ape yacht club saw a hack this year after the discord of a community manager was compromised,hackers walked away within a tease worth 200 ETH.
Things should be more fair, if Wall Street banks are fined 1.8 billion for using “banned” messaging apps, then maybe projects like you, the lab should face similar proactive fines.
What should or could be done ?
The first step for any Metaverse project will be to classify their assets. It should be made clear if the ass it is a security,utility token, or something completely different. This should not be too hard of a task as the groundwork has already been laid out by the ICO era in 2017. Consumers should be given complete information that is clear and precise provided by regulators and protocols.
A regulatory framework will probably be next, this framework will probably be applied to the metaverse. The regulations will include rules around things concerning securities, anti-money, laundering, and protective measures for consumers. there should be a balance between the regulations and the project, because too much regulation will probably halt any innovation that can be made in the web3 space. To little regulation could cause more abuse of the customers by disreputable individuals.
It should be recognized that the Metaverse brings together three types of technology; virtual reality, augmented reality, and NFTs, each coming together to build a new Internet.
The metaverse isn’t safe…yet
There are always new tactics and new exploits being discovered by cybercriminals. These new tactics can be used by these criminals to perpetrate acts such as hacking schemes or identity theft. This is due to a AR and VR generating massive amounts of personal data, which includes biometric info from eye-tracking and body tracking technology, this is indeed a “kid in a candy store” situation for those that will do I’ll against their fellow man in web3.
As the demand for the metaverse continues, there will be a need for better Internet services, which require a lot of bandwidth. It’s quite possible to telecom networks and their existing data dissemination infrastructures may become overloaded. Investing in 5G technology in building a stronger infrastructure is required for this takes time, money and resources. One of the solution would be to develop data compression algorithms that can reduce the amount of energy required to transmit data.
Security is a major problem in Web3 currently as many platforms, crypto projects, and metaverse platforms have been attacked by exploits resulting in the loss of millions of dollars. In order for things to run smoothly, a better -more robust, stronger security ecosystem needs to be created.
It should be noted that any network operator, firm, or business can exist on paper outside of the regulatory framework of a country. Platforms such as Facebook and Twitter are not based in the United States. Instead, they are based in countries were data, protection, laws are much more relaxed like Ireland and Singapore. What this means is some web3 companies can move themselves on paper to other countries that would allow them to skip some of the regulatory constraints of the United States.
This simply translates to a need for every participant of the metaverse to agree with the vision of setting up a uniform code of governance. There is no way to stop a third-party from creating an unregulated pocket within the meta-verse which users could then access without any apparent restrictions.
With all of the ways for cyber criminals to interact with users, exploit crypto projects, or take advantage of good faith there is definitely going to be a need for regulations in the web3 space. As the metaverse continues to grow and build, and as we as a community look forward to the new iteration of the Internet, one thing is for sure- with money involved, investments being made, and transactions continuing to flow, regulators will soon be involved in every aspect of the metaverse.a