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Opinion: The Metaverse is set to change our legal system in complex ways—a lawyer breaks down its possible role and implications

If it takes off, the Metaverse will be like the Big Bang. Life, as we know it, may not be the same again. 

The Metaverse promises to make reality virtual by allowing us to move online in a more holistic way—think Facebook’s Horizon Workrooms. Perhaps more excitingly, the Metaverse promises to make the virtual a reality—think digital assets, the creation of virtual cities, malls, real estate, etc that have real-world value.

But the seismic change will not only happen in terms of how we work and live, but—in the area that’s closest to my heart—how the law works, if at all. There is no doubt the law will be challenged. The big question is: how relevant will the law be in the Metaverse?

It may seem obvious that the law should be regulating the Metaverse in the same way it insinuates itself into every part of our everyday lives today. But the law requires hierarchy, power and order. These are values that are antithetical to the Metaverse, which prizes decentralisation and interoperability. In such an environment, it is less certain what role the law can or will play in the Metaverse itself.

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One good illustration is the blockchain, which is set to become the default way in which digital assets are transferred and owned. If ownership is determined by registration of an asset on the blockchain, will nice legal theories of ownership (including trusts and beneficial ownership) have any role to play in this construct? 

It is not even clear how a will can be devised over a digital asset on the blockchain because unless the beneficiary is given access, they have no means of accessing the asset and transferring it to themselves. The only way a transfer can take place at the moment is if the beneficiary is given access to the digital asset. And yet, one might not always want to do that ahead of one’s death. What if there is a last-minute change of beneficiary? 

Even if there is some residual role for the law in cases of blockchain theft or fraud, what possibility of tracing and recovering digital assets is there? 

The answer may not lie in the law per se, but in the security of the blockchain. And the irony will be that the more secure the blockchain, the more it will be the only recognised form of ownership. This in turn may, as argued above, challenge the role of the law in regulating digital asset ownership. 

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Data collection, processing and privacy will also be difficult to manage in the Metaverse. At present, specific regulations may differ according to different countries—but consent is key. 

But the future of ‘consent’ will look a lot more like the requests on our iPhones to allow one app to continuously track activity on another. In other words, a one-time consent. This is because the Metaverse is intended to be a continuous, immersive existence, and seeking consent each time you engage in an activity seems impractical. The ability to control and select data that is collected once that consent is given is likely to be meaningless. And the more customised and personalised the user wants their experience to be, the more their data is going to be collected, processed and shared with other operators without specific consent.

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Then there are social and ethical issues around how we ensure the Metaverse is a safe space for all communities to operate and live in. Yet, if internet regulation on this front is anything to go by, attempts to regulate hate speech or disinformation will be patchy. All the more so in the Metaverse. It is not impossible that virtual cities can be created by nefarious quarters to promulgate sectarian ideology. 

The Metaverse can also create challenges for international law and sovereignty. If virtual cities can be created, why not virtual countries? Why not virtual countries that mimic a particular country but with different characteristics, borders or ideologies? And if a particular conception of a virtual nation became popular and people were buying virtual real-estate there, or working or doing business there, what impact would that have on the real nation that has been mimicked?

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Applying the law even to the simplest matters will be challenging. If, while at a virtual bar, a fight breaks out and one avatar hits another, is that assault and battery? What if the users were wearing haptic suits such that the victim of the virtual blows can feel the impact—but not to the same degree as if it were to happen in real life? 

Above all, laws would also need to be harmonised or else the promise of the Metaverse will be hampered by unnecessary uncertainty or transaction and regulatory costs. That of course will not happen overnight. 

These are only some of the difficulties that the law will face as it confronts a new frontier. Does it mean the law will become useless? Probably not entirely. The Metaverse is not intended to and probably will not supplant the physical world. So one can try and control the Metaverse by controlling the companies or persons creating aspects of the Metaverse or operating within it—as governments around the world are already threatening to do. But the decentralised, technology-driven features of the Metaverse are likely to make it more challenging for the law, which will need to adapt or even devise new concepts. The future awaits.   

Singaporean lawyer Paul Tan is a partner of Clifford Chance Asia and heads its litigation practice for Southeast Asia. He acts for governments and global clients in all manner of international commercial disputes and increasingly those involving technology and ESG issues.

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