Meta released a position paper regarding its most recent thoughts on regulation in the metaverse on December 2, 2022. Noting its ongoing work with the Metaverse Standards Forum (which Meta established in June 2022 and now has 1,800 organization members) , the position paper reaffirms Meta’s position that interoperability and portability are ultimately the key to the success of the metaverse.
While acknowledging that regulators and policy makers are paying considerable attention to the application of blockchain technology in the financial services sector (for example, cryptocurrency exchanges), Meta points out that “it is important to recognize that blockchain also has broad non- that may be critical to the economy of the metaverse”, i.e. blockchain-based non-financial NFTs.
The political declaration goes on to make three main points to regulators and policy makers:
- adopt a technology-neutral approach that focuses on “same risks, same rules”
- recognize that decentralized systems have a role to play in unlocking new economic opportunities by fostering innovation, competition, interoperability, and the portability of ownership and identity
- embrace greater collaboration between the public sector and industry as a key foundation for any future regulatory framework
Regarding the first point, Meta points out that many blockchain-based non-financial assets (for example, digital art) should be treated as they are in the physical world and, therefore, left largely unregulated. Meta goes on to suggest that consumer protection laws for the physical world may not be suitable for blockchain-based digital assets. Instead, “blockchain analytics” can sufficiently protect consumers when, for example, a digital artwork is sold. Meta points out that regulators can support economic innovation and creativity through treatment that “does not discriminate” against technology and “does not place undue demands on individual creators.”
As for the second point, Meta hopes that regulators take into account the characteristics of a decentralized environment. Meta hopes regulators will focus on these principles and not rush to impose new rules. Meta recognizes that companies have a central role to play in developing effective and secure user experiences. But he also argues that decentralization and the use of blockchain-based assets can be used on a large scale to promote easy portability of digital assets (possibly across different metaverses), with acceptance largely established so that digital assets don’t leak. their value if their original associated environment fails.
This approach could have interesting interactions with the brand new article 12 of the UCC, which regulates digital assets. Article 12 emphasizes control of the digital asset, in contrast to the physical possession associated with many traditional forms of collateral. Several states have already adopted Article 12.
Meta’s third and final point emphasizes the need for cross-jurisdictional standards given that the metaverse will transcend state and national boundaries. Meta warns of “burdensome local data storage requirements” posing challenges for cross-border applications, but encourages regulators and companies to work together to establish industry standards for proof of identity among users of the metaverse. Meta rightly points out that a unified approach to identity creation and related privacy protection is critical to creating secure and cost-effective virtual environments.