China Banking and Insurance Regulatory Bureau 315 re-names the Metaverse, hype and sees regulatory problems. Is legislation a top priority?

On March 15th, the Beijing Bureau of Banking and Insurance Regulatory Commission issued a risk warning of “Rational Consumption, No Loans, Good Youth, No Debt”. It pointed out that there are currently some “mini games” on the Internet, which are hyped under the guise of concepts such as “Metaverse” and “blockchain”. .

This is after the China Banking and Insurance Regulatory Commission issued the “Risk Warning on Preventing Illegal Fund Raising in the Name of “Metaverse” on February 18, the regulatory authorities once again named the issue of illegal fundraising by “Metaverse”.

Based on innovative and integrated applications supported by six major technologies, Internet of Things technology, blockchain technology, interactive technology, network and computing technology, artificial intelligence technology and video game technology, Metaverse has received two-way attention from the government and the market since last year.This year, many places have directly written it into local government work reports and plans, and laid out a new track for the digital economy.

Especially during the National Two Sessions this year, Metaverse became popular again and appeared in the proposals and proposals of many deputies to the National People’s Congress and members of the Chinese People’s Political Consultative Conference.

On the one hand, the Metaverse continues to be hot, and on the other hand, the market is chaotic. The prices of a large number of virtual assets and virtual land parcels have been continuously raised, and the problems of property ownership and circulation have become increasingly prominent. ;

Many of the representatives of the two sessions also mentioned “the issue of how the fiery Metaverse should be regulated.” Liang Wei, member of the National Committee of the Chinese People’s Political Consultative Conference, suggested to speed up the formulation of Metaverse industry standards, industrial standards, technical standards, etc., to establish a standardized standard system for the development of the Metaverse industry; Wan Jie, member of the National Committee of the Chinese People’s Political Consultative Conference, also said that the principle of two-pronged approach should be followed to strengthen supervision and management. Encourage innovation in parallel. 

What the industry needs more is to think calmly, view it rationally, and seize the opportunity to promote the healthy and orderly development of the Metaverse.

  • The Metaverse is in the ascendant, and the time for legislation has not yet come

According to the research by a reporter from the computing power think tank, so far, my country has not issued a systematic legal guidance document related to the Metaverse.

But obviously all departments have noticed the necessity of regulating technological innovation. For example, the “Regulations on the Management of Deep Synthesis of Internet Information Services (Draft for Comment)” issued by the Cyberspace Administration of China on January 28, 2022, the deep synthesis technology mentioned in the regulations refers to the use of deep learning and virtual reality as the representative Synthetic algorithms produce text, image, audio, video, virtual scene and other information technology, which is considered by industry experts to be a generalized Metaverse technology agreement. In March 2022, the official website of the China Mobile Communications Federation Metaverse Industry Committee released “Metaverse” Industry Self-discipline Convention, development and drafting of group standards for “NFT Platform and Product Evaluation” carried out by the Standardization Working Committee of China Technology Market Association under the Ministry of Science and Technology on September 22, 2021.

From the rise of the concept to today, the Metaverse has only been a year.

Attorney Xiao Sa, a partner of Dentons Law Firm, believes that due to the lagging nature of the law itself, the Metaverse is still in its primary development stage, and its underlying constructions such as blockchain technology, interactive technology, artificial intelligence, NFT, cloud computing and wearable devices Fundamental technologies such as these are gradually converging, but there is still a long way to go to truly realize the vision of the Metaverse. In the face of the Metaverse industry that is developing and changing every day, it is unrealistic to make special legislation on it at this stage.

It is worth mentioning that the legal attributes, circulation, taxation and other issues of Metaverse virtual assets have been concerned by people inside and outside the industry.

“Virtual assets have the characteristics of secrecy and anonymity. Whether the game player’s transaction is confirmed with a price increase, the personal income tax collection of the profit part is difficult to implement in the short term.” Some industry practitioners pointed out that it is currently difficult to define whether the acquisition of virtual assets in the Metaverse is legal. . A considerable number of virtual assets involve speculation or illegal issuance, and the assets themselves are not legal.

So far, it is still unclear how the legal attributes of virtual assets in the Metaverse are positioned, how intellectual property rights are clarified, and how taxes are collected, etc., and it remains to be further demonstrated by the legislature.

  • Metaverse scenarios are diverse, and regulation involves different legal categories in different industries

An industry expert who did not want to be named told the Hashpower Think Tank reporter that Metaverse, as an innovation in content and production methods that needs to link many technical collaborations and multi-application scenarios, involves many industries and directions. For example, a Metaverse platform company engaged in telecommunications business shall comply with the relevant requirements of the Telecommunications Regulations of the People’s Republic of China and the Measures for the Administration of Telecommunications Business Licenses, and apply for a telecommunications business license in accordance with the law.

In addition, according to the requirements of different industries, Metaverse companies (platforms) need to apply for the compliance qualifications required by the industry when operating different products.

As the most mature application of the Metaverse, the supervision of the game track has to be mentioned. In my country, game publishing needs to go through a strict administrative approval system, and ICP, soft copy and version number are indispensable. According to a survey by a reporter from the computing power think tank, the application for domestic game version numbers is extremely strict at present, and companies with game publishing qualifications are very scarce. It is currently impossible for a Metaverse game to obtain a version number.

 According to a practitioner of a well-known game company, both domestic game practitioners and C-end players generally do not have a clear positioning of Metaverse games.

“Game companies all say that they want to make Metaverse games, but they are not very sure about how to do it and what to make. It is the mainstream status quo that changes while talking and doing. Moreover, games will not be released due to version number restrictions and so on. domestic release.”

Strictly speaking, there is no real Metaverse game in our country. Therefore, under the banner of Metaverse games in the society, web games that “earn while playing” are more of a scam and hype that needs to be regulated.

Lawyer Xiao Sa reminded that there are platforms with similar games or game elements in the market that need to be paid attention to. To do a good job in corporate compliance construction, it is necessary to focus on data compliance (data export, personal information protection, etc.), technical compliance (deep synthesis, network pop-up windows, promotions, etc.), and minors protection, etc., to build compliance to avoid all kinds of legal risks.

Speaking of the top spot in the Metaverse, NFT is naturally well-deserved. This unique and indivisible token has been extended to be a virtual digital collection in the Metaverse field, and it is also an important entry medium for many people in the traditional world to understand the Metaverse.

NFT has attracted a large number of artists, collectors and institutions from the traditional market to pour in, allowing arts and humanities to be plugged into the wings of a new generation of information technology. At present, my country does not open secondary transactions in the NFT market, and it is not allowed to transfer gifts for the time being (the general industry limit is 180 days). However, under the strict prohibition of the hype bubble, NFT still faces many irregularities, such as brand infringement, digital cultural creation, hype, and fraud.

In December 2021, American artist Mason Roth-schild launched 100 “MetaBirkins” series NFT handbags at Art Basel Miami.Subsequently, the French luxury brand Hermès (Hermes) issued an official statement, accusing the former of creating and selling without its authorization.

In an interview with a reporter from the Hashpower Think Tank, lawyer Xiao Sa suggested that we should focus on regulating the development of NFTs from the following aspects:

One is to strengthen the copyright protection of digital collections. Relevant institutions cooperate with national pilot units for innovative application of blockchain in the copyright field to jointly explore the registration and rights protection mechanism of digital collection copyright, improve copyright protection in various industrial links such as digital collection production, distribution, and sales, and formulate copyright protection related to digital collections. Implement measures to safeguard the legitimate rights and interests of market cultural and creative production workers or organizations, and consolidate the foundation of a benign production environment for digital collections.

The second is to strengthen the supervision of the issuance of digital collections. Due to the similarities between digital collections and traditional publications, limited-edition souvenirs and other products, it is recommended that relevant departments formulate management measures for the issuance of digital collections, and supervise the issuance of illegal and bad digital collections.

The third is to establish an access system for digital collection trading platforms. It is recommended that relevant departments formulate an access system for digital collections trading platforms, raise the administrative approval threshold for the construction of trading platforms, and supervise and manage the application of blockchain algorithms on trading platforms and data generated by transactions, so as to prevent some criminals from passing through digital collections trading platforms. Conduct illegal and illegal operations and infringe on the legitimate rights and interests of consumers.

  • The technology is not yet fully mature, and data security is still a life-threatening test

In addition to games and NFTs, the common problems faced by the scenario-based innovative applications of “Metaverse+” are data privacy and data security violations.

2021 is both the first year of the Metaverse and the first year of data compliance in China. This year’s “Government Work Report” proposes to strengthen network security, data security and personal information protection.

As the next era of the Internet, Metaverse data privacy protection and data value confirmation will also be a pain point for the future development of the industry.

Compared to internet data, the personal data collected by the Metaverse is richer and more comprehensive. In addition to current routine data such as ID card information, email address, phone number, job title, and shopping, Metaverse also collects biometric information such as users’ iris and voice information.

Faced with a large amount of information, institutions must firstly ensure that data is not stolen or leaked, and secondly, collect, use, and manage according to the law within the scope permitted by laws and regulations.

As far as data privacy protection is concerned, Metaverse relies on the characteristics of blockchain technology, such as distributed accounting, non-tampering, and smart contracts, to complete data interaction between different applications and devices to improve data security. However, blockchain technology is currently in its infancy, and in the face of a large amount of data, there may be problems such as poor computing power efficiency.

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