The role of legal and compliance in the metaverse

The metaverse, a virtual world where individuals can interact with one another in a digital environment, is a hot topic. Google the word and you’ll get about 182 million results. As the metaverse continues to grow, businesses will increasingly look for ways to capitalize on its potential.

There’s lot of great content and thought leadership out there on the topic of the metaverse. But one area crying out for attention is the intersection of law, compliance, and the metaverse.

The significance of the legal issues raised by the metaverse has crystalized in importance with the advent of generative-AI tools such as ChatGPT. As the space grows and is further defined and built out, and as companies, as well as governments, political subdivisions, and nongovernmental organizations establish larger digital footprints, digital twins, and virtual experiences that blur the lines of reality, legal and compliance professionals must have a seat at the table to help draw boundaries, establish reasonable guardrails, and ensure that these technologies are used for the betterment of the human experience.

One of the main challenges posed by the intersection of law, compliance, and the metaverse is the lack of clear legal frameworks. Many aspects of the metaverse, such as virtual currencies, digital property, and user-generated content, have legal implications that are not yet fully understood or defined. The lack of consensus and guidance from regulators and lawmakers on how these assets should be regulated adds further ambiguity to this hazy landscape. Despite this uncertainty, there are four considerations that companies and other metaverse actors can turn to in order to build out the intersection between law, compliance, and the metaverse experience.

  • Compliance with existing laws. First and foremost, companies operating in the metaverse must comply with applicable and existing laws and regulations, such as those related to data privacy and intellectual property (IP). In the data privacy context, this may include obtaining consent from users to collect and use their personal information, as well as implementing security measures to protect that information. Likewise, IP laws and regulations may be implicated by users creating and trading virtual creations. Companies must be aware of the IP rights that apply to these items and ensure that they are not infringing on the rights of others.
  • User awareness. Another important consideration for compliance in the metaverse is the responsibility of users. Just as in the real world, users in the metaverse must comply with laws and regulations. For example, as users create avatars and interact with others, they may be sharing personal information or infringing upon the IP rights of others without realizing it.
  • Ethical and social responsibility. Individuals should consider their ethical and social responsibilities when operating in the metaverse. This includes promoting inclusion and diversity, combating harassment and hate speech, and ensuring the safety and well-being of other users.
  • • Avoiding fraud and scams. Finally, companies operating in the metaverse must be aware of the potential for criminal activity, especially fraud and scams. As with any online environment, there is the potential for individuals to engage in deceptive practices, such as selling fake virtual items or misrepresenting themselves to others. Companies must implement measures to protect their users from these risks by providing education on how to avoid scams and implementing measures to detect and prevent fraud.

The intersection of law and compliance in the metaverse is a complex and evolving topic that requires ongoing attention, consideration, and an eye on the evolving regulatory landscape. Areas of law such as data privacy, IP, and fraud prevention are just a few of the areas where companies must take steps to ensure compliance. By doing so, companies can take advantage of the many opportunities presented by the metaverse while still operating in a responsible, ethical, and legally compliant manner.