Recent Meta Policy Statement Outlines Goals, Hopes For Metaverse Regulator Activity – Fin Tech

Meta released a position paper concerning its most recent
thoughts about regulation in the metaverse on Dec. 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 reiterates Meta’s position that
interoperability and portability are ultimately key to the success
of the metaverse.

While acknowledging that regulators and policymakers are giving
considerable attention to the application of blockchain technology
in the financial services industry (e.g., crypto exchanges), Meta
stresses that “it is important to recognize that blockchain
also has extensive non-financial applications that can be
foundational to the metaverse economy,” namely non-financial,
blockchain-based NFTs.

The policy statement goes on to make three major points to
regulators and policymakers:

1. adopt a technology-neutral approach that focuses on “same
   risks, same rules”




2. recognize that decentralized systems have a role to play in
   unlocking new economic opportunities by fostering innovation,
   competition, interoperability and portability of ownership and
   identity




3. embrace greater collaboration between the public sector and
   industry as a critical foundation for any future regulatory
   frameworks

As to the first point, Meta emphasizes that many non-financial,
blockchain-based assets (e.g., 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 well-suited to blockchain-based
digital goods. Instead, “blockchain analytics” may
sufficiently protect consumers when, for example, a digital piece
of art is sold. Meta emphasizes that regulators can support
economic innovation and creativity through treatment that
“does not discriminate” against technology and “does
not impose undue requirements on individual creators.”

As to the second point, Meta hopes that regulators will bear in
mind the features of a decentralized environment. Meta hopes that
that 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 safe user experiences. But
it also states that decentralization and use of blockchain-based
assets can be used on a broad scale to promote easy portability of
digital assets (eventually between different metaverses), with
acceptance established broadly so that digital assets do not lose
their value if their original associated environment fails.

This approach may have interesting interactions with the
brand-new UCC Article 12, governing digital assets. Article 12
emphasizes control of the digital asset, as opposed 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 borders. Meta cautions against
“onerous requirements for local storage of data” that
pose challenges for cross-border applications, but encourages
regulators and companies to collaborate to establish industry norms
for proof of identity among metaverse users. Meta rightly points
out that a unified approach to identity establishment and related
privacy protection is critical to establishing safe, economically
vibrant virtual environments.

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