Over the past few months, the rise of the new digital age (called “Web 3.0”) has taken a high turn, with many industries shifting their perimeters to be accommodate the next evolution of technology and the World Wide Web. Adding to this rapid growth and development, a huge interest in Web 3.0 has taken over, with everyone jumping into the “Meta pool”. In April 2022, Wasel & Wasel Arbitrator Services hosted one of the first online discussions on legal issues in Metaverse, NFTs, and Web 3.0 in general. The webinar generated a lot of engagement and led to follow-up articles and people asking for more. But important questions have arisen about some aspects of Web 3.0, most important of all, what exactly is the metaverse that leads to Web 3.0 charging? In its simplest form, consider Ready Player One.
Playing on the core concept of first-mover advantage, companies across industries and sectors are already starting to dive first into the metaverse. Epic Games, the company behind the popular immersive video game “Fortnite”, has launched a billion dollar funding round to increase growth opportunities in the metaverse, Microsoft is developing its own digital environment , within the metaverse, is called Mesh, and Apple is now working. there is no fatigue in advanced virtual reality gear that will change the Metaverse experience. The latter should be available for sale in four different variants by 2024.
Effective May 3, 2022, the Dubai Virtual Assets Regulatory Authority (“VARA”) became the first regulatory authority in the world to enter Metaverse with the establishment of its Metaverse headquarters in the dynamic virtual world, aptly named “The Sandbox” . VARA was created to provide a secure and progressive operating framework for the virtual asset industry to grow, while ensuring market and investor protection. Among other things, this decision reflects the UAE’s commitment to the new economy and confidence in the security and sustainability of the Web 3.0 ecosystem. With VARA’s historic start in the metaverse, it seeks to ensure that the regulator has access to its industry around it and facilitate collaborative interactions between global virtual asset service providers, industry thought leaders and international regulatory authorities.
VARA’s debut in the metaverse came after the Emirate of Dubai enacted Virtual Assets Regulation Act No. 4 of 2022, which also established VARA itself. Called “VAL,” the law establishes a legal framework for businesses and individuals regarding virtual assets, such as NFT and cryptocurrency. Articles 4 to 14 of the VAL establish in detail the framework and operation of VARA. Articles on the regulation of virtual assets begin with Article 15, with Article 15 (a) stating immediately that:
“No one can do business in the emirate [Dubai] without obtaining permission from VARA. »
“Activity” is defined as any activities referred to in Article 16 of the VAL that are subject to the control of VARA, including:
- The provision of virtual asset platform operation and management services (Article 16 (a) (1))
- Provision of exchange services between Virtual Assets and national or foreign currencies (Article 16 (a) (2))
- Provision of services related to virtual asset wallet (Article 16 (a) (6))
- Provision of services related to the offering and sale of virtual tokens (Article 16 (a) (7))
Section 20 of the VAL details the violations and administrative penalties that may be imposed by VARA, including suspension of the license for a period not exceeding six (6) months (Section 20 (b) (1)) or revocation of the license in general and even the cancellation of trade licenses (section 20 (b) (2)). Section 22 of the VAL deals with complaints as follows:
“Any affected party may present a written complaint to the Director-General against any decision, action or action taken against him under this Act or resolutions taken thereunder, within thirty (30) days from the date of notification of the dispute. decision, action or measure. The complaint shall be determined within fifteen (15) days from the date of its referral to the committee formed by the Director General for this purpose. The committee’s decision on the complaint shall be final.
Just across the street in the UK, renowned blockchain diversity leader and founder of Women in Blockchain Talks, Lavinia Osbourne, won an important early victory in the High Court of England and Wales, being the first of its kind to recognize NFTs . as legal property under freezing, until the matter is resolved. While courts have previously recognized cryptocurrencies as legal assets subject to court orders, this is the first time NFTs have received the same attention.
The case, which is similar to the synopsis of a Netflix show, involves two “Boss Beauties” NFTs, which were taken from Osbourne’s digital wallet without his knowledge or permission. Osbourne, who works with a security and intelligence company, found NFTs in two identical digital wallets. Osbourne has filed an appeal with the High Court of England and Wales seeking an urgent order to freeze the NFTs to prevent their sale. The injunction was granted on March 10, then continued until the end of the proceedings on March 31.
Hacking and theft are a more common problem for NFT holders. Since space is still a “Wild West” when it comes to legal means or regulation, it could mean that those who steal their NFTs are not guaranteed to get them. These legal decisions recognize for the first time that NFTs, such as cryptocurrency, are assets, giving NFT holders the legal means to pursue the return of stolen assets.
Now, with the creation of VARA and VAL, the rapid growth of the metaverse, and the growing need for a legal framework for digital assets such as cryptocurrency and NFTs, disputes should arise around the world and the dispute resolution procedure follows. Who knows, maybe a virtual asset arbitrage center is in the air. But the advancement of Web 3.0 is unprecedented and invincible, and only time will tell how far virtual reality will be pushed until it becomes our reality.