Legal misconceptions in the metaverse: five to look out for 

August 10, 2023
Yuliya Prokopyshyn


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While the concept of the metaverse has become more widely understood and embraced in recent years, this has raised a number of questions as to its legal standing. Yuliya Prokopyshyn, Web3 Associate, demystifies some of the common legal misconceptions surrounding the metaverse:  

  1. The laws do not apply to the metaverse 

Despite its decentralised nature, the metaverse does not operate in a legal vacuum. While the laws regarding virtual currencies, digital property, and virtual interactions are still being established, staying informed about legal developments at both local and global levels is crucial to operate successfully within the metaverse.  

  1. Virtual property is like physical property 

While virtual property may seem like physical property, it often operates under different rules. Ownership rights might be subject to the metaverse’s terms and conditions, and they can be altered or revoked by the metaverse owner. As such, it’s important to check the terms before purchasing virtual property in the metaverse.  

  1. There are no tax implications from virtual activities  

In reality, engaging in virtual activities in the metaverse that generate income, like selling virtual property, could have tax implications. The tax treatment of virtual transactions often varies by jurisdiction, and advice should be sought from tax professionals who understand the nuances of the metaverse.  

  1. Virtual interactions in the metaverse are exempt from privacy regulations   

Just like in the physical world, personal data protection matters in the metaverse. Virtual interactions often involve the collection and processing of personal data, requiring compliance with data protection laws. Hence, metaverse owners should implement robust data protection measures.  

  1. Illegal activities in the metaverse have no real-world consequences 

On the contrary, actions like virtual theft, fraud, or harassment can lead to penalties both within and outside the metaverse. Therefore, it’s necessary to consider how you act in the metaverse as well as put in place policies and procedures that ensure a safe environment for metaverse users. Remember, legal considerations in the metaverse are complex. Consulting legal and tax experts is crucial for a smooth journey into this exciting space. 

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