Web3.0 : Challenging Laws and Legal Challenges

1. Background: Web3.0 is coming

In different periods, Web 3.0 will have different meanings, and the most recent feature of Web 3.0 is to allow users to “own” a part of the network and truly become the master of their own digital assets.

In this context, the biggest feature of the Web1.0 era is the centralized network, such as portal websites such as Sina and Sohu. The information and content published in the cyberspace are completely controlled by large enterprises and large platforms, and it does not matter to individuals own network assets; in the era of Web 2.0, with the development of Internet technology, users can participate more in the creation of content in cyberspace, whether it is Weibo, Facebook, Twitter or B station, user-generated content Content (UGC) has become an important network resource, and the issue of personal information protection has arisen spontaneously.

In the context of Web 2.0, the network account registered by users through mobile phones and emails has become an important virtual asset for users, but in most cases, the platform will stipulate through the user agreement that the platform has the ultimate ownership of the network account, and the user only has the right to use it. Therefore, we have seen too many cases. After the operation of online games or platform services is terminated, users can only sadly “say goodbye” to their accounts and their content.

Web3.0 : Challenging Laws and Legal Challenges

 The concept of Web3.0 is based on a decentralized network architecture. Users can store their digital assets in their own encrypted wallets through private keys, and migrate from one platform in the chain to another. Such a vision is disruptive both in terms of business models and regulation. Even if Web 3.0 cannot completely replace the existing network architecture and business model, the legal challenges faced by Web 3.0 are worthy of attention.

2. Decentralization: Is everyone a network operator?

Network operator is one of the most basic concepts in the Cybersecurity Law, which refers to “network owners, managers and network service providers”. Based on the idea of ​​managing a centralized network, network operators need to undertake a large number of legal Obligations, such as log retention, auditing the content of the network system, protecting the personal information processed by the network system, etc.

Web3.0 : Challenging Laws and Legal Challenges

Under the concept of Web3.0, if users can truly own a part of the network system, although they will contribute to the decentralized network, they will also make themselves a “network operator” in the sense of the “Cyber ​​Security Law”. In theory, it is necessary to bear the corresponding legal responsibility. Therefore, under the Web3.0 architecture, users are more required to self-manage their own data, their own content, and their own tokens, because objectively the platform has no way to intervene in the user’s content.

Taking the network operator as the main object of supervision, the idea behind it is to require the operator to be responsible for the data in the server, which is the supervision idea in the era of network centralization. This also leads to the fact that in the current blockchain supervision represented by the “Regulations on the Management of Blockchain Information Services”, the blockchain information service providers and the filing system are used as the starting point for supervision, and decentralization is not really considered for supervision. The challenges brought by it, let alone the challenges brought by the operation of decentralized autonomous organizations (“DAOs”) to supervision, especially considering the impact of various overseas public chains on domestic residents, one-size-fits-all shielding cannot become a long-term solution.

The core supervision method of the “Regulations on the Administration of Blockchain Information Services” is filing. In March 2022, WeChat issued, disseminated or engaged in related business activities without obtaining statutory licenses or licenses, and the account has been stopped on the grounds that “the user complained and was reviewed by the platform, and the account has been stopped”. Digital collection platforms are banned. The official letter sent by WeChat reminded, “After the platform has detected, your official account is suspected of having NFT digital collection trading business, and you need to provide a certificate of NFT digital collection trading business qualifications.” And the blockchain-based Web3.0 also It will be difficult to escape the constraints of the filing system, and the platform will naturally occupy the position of the operator, thus diluting the characteristics of decentralization.

Previously in the Kuai Broadcasting case, Kuai Broadcasting Company, as the operator of the player based on P2P technology, was also found to be responsible for auditing. It can be seen that a decentralized architecture has never been a reason to evade supervision.

The Cybersecurity Law does not consider the management of decentralized networks in the setting of responsibilities, nor does it exempt individuals from their compliance obligations as network operators. Since everyone can be a network operator, everyone can also be an information processor. In this case, the provisions of Article 72 of the “Personal Information Protection Law”, “This Law does not apply to natural persons who handle personal information due to personal or family affairs” may also have more applicable scenarios.

3. Digital assets: Can NFT break the balance of digital power

The biggest feature of Web 3.0 is that it will change the way users hold data. Relying on blockchain technology, digital collections under the Web 3.0 concept mostly exist in the form of NFTs (non-fungible tokens) to ensure the uniqueness of each collection. The so-called NFT, namely Non-Fungible Token (Non-Fungible Token), is mainly compared with homogeneous tokens such as Bitcoin. In French, an NFT asset is a specific thing, that is, each “share” of NFT is different; while for a homogeneous token like Bitcoin, each “share” is the same, that is, 0.1 in your wallet There is no essential difference between bitcoin and the 0.1 bitcoin in my wallet.

Traditionally, users who hold their own network data mainly rely on the platform account to log in. In the User Agreement, it is usually stipulated that the ownership of the account belongs to the platform, and the user only has the right to use the account. Such ownership arrangements are mainly limited by the technical architecture. Because under the Web2.0 architecture, users have no way to use their own data, and the data needs to be stored in the platform’s server, and the platform can easily bypass the user to operate the data in the database, so the control of the data is essentially is on the platform side.

In the context of Web3.0, tokens in digital wallets can exist without the platform by means of encryption technology. Even if the platform “runs away”, the tokens in the wallet may still exist on the chain. Such a design could help reverse the platform-biased state of the current data property rights setting.

However, in practice, the attribution of digital collections still needs to be carefully screened, because the attribution of NFTs on different platforms is really different. In particular, the NFT transactions on many platforms choose to retain intellectual property rights, which has laid legal hidden dangers for users who purchase digital assets to use digital collections.

In addition, domestic digital collection trading platforms often provide services based on private chains. Like the Web 2.0 era, users still use their registered accounts to establish connections with their own data collections, and cannot achieve real meaning through their own digital wallets. “Control” on the . However, domestic policies on digital assets often set restrictions prohibiting the transfer of digital assets, or prohibit the transfer of digital assets that consumers have purchased, or require that transfers be prohibited within a certain period of time.

Web3.0 : Challenging Laws and Legal Challenges

For example, for digital collections in “Ali Auction”, in most cases, users can obtain copyright property rights other than the personal rights of the copyright through auction, and the transfer of the copyright of the work is automatically completed in the “New Edition Chain”. However, Ali Auction has set a 90-day “transaction cooling period”, that is, it cannot be resold on Ali Auction within 90 days. In essence, users can buy a copyright certificate that is restricted from resale within 90 days on Ali Auction.

However, according to Article 27 of the Copyright Law, a written contract is sufficient for the transfer of the copyright (property) rights of a work, and no registration is required.

This makes the following scenario possible: Suppose I obtain the copyright of a work through Ali Auction, although Ali Auction has set a “transaction cooling period”, I can sign the copyright of the work in writing with a (good faith) third party transfer agreement. In this scenario, it is difficult for Alibaba’s “new version chain” for auction and copyright registration to fight against a bona fide third party, and the third party can go directly to the China Copyright Protection Center or other provincial copyright protection agencies for copyright registration. Disputes are inevitable.

And such potential risks are only a drop in the ocean, and others such as the dislocation of exhibition rights and the constraints of information network dissemination rights on digital collections are not to be mentioned. When the laws of the Web2.0 and Web1.0 eras are applied to Web3.0, there will be various lags because they are not compatible.

Fourth, all Web3, the mutual achievement of code and law

Professor Lessig believes in the book “Code” that the network order will be regulated by laws, norms, markets and codes at the same time. Web 3.0 has already referred to the transformation of network architecture, which will inevitably bring huge waves to the network order. Even if Bitcoin is just a glimpse, it has already brought a wave that has not subsided to the Internet financial order. The potential of Web3.0 lies in reshaping the property mechanism in cyberspace.

Web 3.0 is more likely to help individuals exercise their personal rights under the Personal Information Protection Act. For example, existing network platforms may not be able to identify users’ personal information due to the obstruction of encryption technology, and must “exchange” users’ personal information by giving users more benefits. For example, after the emergence of network-based communication tools such as WeChat, telecom operators can only provide traffic support. If they want to participate in the processing of information, they must go through the Internet platform. Web 3.0 also has the ability to marginalize the platform.

In the era of Web3.0, digital wallets are expected to become the entrance of Internet resources, and even a bridge connecting data assets and users. That is, through digital wallets, users are expected to bypass the platform and directly manage their own data. However, under such a structure, the security of digital wallets is also worth worrying about, and it is not uncommon for digital wallets to run away with user assets or “pickpockets” in cyberspace. Changes in the network entrance will naturally bring about the birth of new giants in the cyberspace, and the anti-monopoly law will certainly have new room for exertion.

In a situation where substantive law may not be able to respond to the challenges brought by Web3.0 in a timely manner, technology-based autonomy and contracts will become a stabilizer for industry compliance development, making Web3.0 compatible with existing legal and regulatory systems to the greatest extent possible .

Blockchain, time stamping, and encryption technology will become the technical foundation of Web 3.0, the raw materials for self-rescue and self-defense in cyberspace, and will directly determine the style of the trench, the material of the city wall, and the specification of the lock key on the city gate.

The contract is a shortcut to bring Web 3.0 into line with the actual law. Through the terms of the contract, the judiciary can directly intervene in the disputes in the cyberspace, and the law can be applied without complicated legal reasoning. And whether to draft a contract that fits the characteristics of Web 3.0 (including user agreement and privacy policy) will also be a challenge for Web 3.0 operators and the lawyers behind them.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/web3-0-challenging-laws-and-legal-challenges/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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