UK recognizes NFTs, Dubai launches Metaverse Licensing

Over the past few months, the development of the new digital age (called “Web 3.0”) has taken a steep incline, with many industries changing their perimeter to accommodate the next development of technology and the World Wide Web. In addition to this rapid development and progress, a huge interest in Web 3.0 has taken over, with everyone jumping into the “Meta pool”. In April 2022, Wasel & Wasel Arbitrator Services hosted one of the first online discussions on the legal issues regarding Metaverse, NFTs and Web 3.0 as a whole. The webinar created significant engagement and led to follow-up articles and people asking for more. But key questions have arisen regarding certain aspects of Web 3.0, most importantly, what exactly is the metaverse that leads the charge on Web 3.0? In its simplest form, think of Ready Player One.

By playing on the core concept of first-mover advantage, companies across a wide range of industries and sectors have begun to dive headlong into the meta-verse. Epic Games, the company behind the popular immersive video game “Fortnite”, has launched a billion-dollar funding round to create growth opportunities in the meta-verse, Microsoft is developing its own digital environment within the meta-verse, called Mesh, and Apple is currently working tirelessly on advanced virtual reality equipment that would revolutionize the Metaverse experience. The latter should be available for sale in four different variants by 2024.

With effect from 3 May 2022, the Dubai Virtual Assets Regulatory Authority (“VARA”) became the world’s first regulatory authority to enter Metaverse with the establishment of its Metaverse headquarters in the dynamic virtual world, aptly named “The Sandbox” . VARA was created to provide a secure and progressive operating framework for the growth of the virtual asset industry, while ensuring market and investor protection. This decision reflects, among other things, the UAE’s commitment to the new economy and confidence in the security and sustainability of Web 3.0 ecosystems. With VARA’s historic beginnings in the metaverse, it will seek to ensure that the regulator is accessible to its industry in its environment and facilitate collaboration between global virtual asset service providers, industry leaders and international regulatory authorities.

VARA’s debut in the meta-verse comes just after the Emirate of Dubai adopted Virtual Assets Regulation Act No. 4 of 2022, which also established VARA itself. Named “VAL”, the law establishes a legal framework for companies and individuals with respect to virtual assets, such as NFTs and cryptocurrencies. Articles 4 to 14 of VAL set out in detail the framework and operation of VARA. Articles on the regulation of virtual assets begin with Article 15, where Article 15 (a) immediately states that:

“No one can carry out the activity in the emirate [Dubai] without having received permission from VARA. »

“Activity” is defined as any of the activities referred to in Article 16 of the VAL that are subject to the supervision of VARA, including:

  • Provision of virtual asset operating and management services (Article 16 (a) (1))
  • Provision of exchange services between virtual assets and national or foreign currencies (Article 16 (a) (2))
  • Provision of services related to virtual asset wallets (Article 16 (a) (6))
  • Provision of services related to the provision and trading of virtual tokens (Article 16 (a) (7))

Section 20 of the VAL describes the offenses and administrative sanctions that VARA may impose, including suspension of licenses for a period not exceeding six (6) months (Section 20 (b) (1)) or revocation of the license in its entirety and even cancellation of commercial licenses (§ 20 (b) (2)). VAL § 22 deals with complaints as follows:

“Any interested party may lodge a written complaint with the Director – General concerning any decision, action or measure taken against him under this Act or decisions taken thereunder, within thirty (30) days from the date of notification of the dispute. decision, action or measure The appeal will be settled within fifteen (15) days from the date of its referral to the Committee set up by the Director – General for this purpose.

Just across the street from the UK, the prominent blockchain diversity leader and founder of Women in Blockchain Talks, Lavinia Osbourne, won an important early victory in the High Court of England and Wales, the first of its kind to be recognized NFTs. as freezing legal property until the case is resolved. While courts have previously recognized cryptocurrencies as legal assets subject to injunctions, this is the first time that NFTs have received the same treatment.

The case, which resembles the synopsis of a Netflix show, involved two “Boss Beauties” NFTs who were removed from Osbourne’s digital wallet without his knowledge or consent. Osbourne, who worked with a security and intelligence firm, was able to locate the NFTs in two separate digital wallets. Osbourne has filed an appeal to the High Court of England and Wales requesting an urgent injunction to freeze the NFTs to prevent their sale. The injunction was given on March 10, then extended until the end of the case on March 31.

Hacking and theft is an increasingly common problem for NFT holders. Since space is still a “wild west” when it comes to legal complaint or regulation, it may mean that those who get their NFTs stolen are not guaranteed to get them back. These legal rulings recognize for the first time that NFTs, like cryptocurrency, are property, giving NFT holders legal access to push to get stolen assets back.

Today, with the creation of VARA and VAL, the rapid growth of the meta-verse and the growing need for a legal framework for digital assets such as cryptocurrencies and NFTs, disputes are bound to emerge worldwide and dispute resolution practices will follow. Who knows, maybe a virtual asset arbitrage center is on the horizon. But the Web 3.0 boom is unprecedented and insurmountable, and only time will tell how far virtual reality will be pushed until it becomes our reality.

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