Blockchain technology is increasingly being used for cryptocurrency games and coin digital goods. Blockchain technology has enormous potential for interactive media applications, such as digital games and collectables. To avoid legal problems, it is crucial for businesses entering this market to seek a legal opinion on your company plan and its particular execution.
Below is an outline of a few legal problems that could develop in these situations. This isn’t an exhaustive list. Each offer must be assessed in light of its unique characteristics and the applicable legislation.
Tokens as Securities
Some tokenised assets, such as virtual objects in cryptocurrency games and crypto collectables, may violate securities regulations if they are not organised appropriately. Many businesses are selling “digital collectables” that are represented as having ownership by an ERC-721 crypto token which https://crypto.games provide. Some of these businesses also offer a marketplace where users may buy, sell, and exchange tokens. In some circumstances, types of interaction with the platform might raise the value of the digital collectables.
It may be considered security exchanges if they allow the selling of tokens that satisfy the requirements for securities. The SEC recently released guidelines on platforms where users purchase and sell digital content, such as digital coins and tokens. According to the SEC, several of these platforms offer a method for trading assets that comply with the federal securities laws’ definition of a “security.
Several cryptocurrency items and games may violate gambling regulations if not designed appropriately. Recent gambling charges against traditional social game developers have been dropped because it was determined that the virtual goods at stake were not “anything of value.”
State gambling laws vary, but in some states, the definition of gambling is as follows: “staking or risking something that is of value upon the result of a game of chance or a prospective contingent event beyond one’s influence or control upon an understanding that oneself or another will start receiving something of worth in the occasion of a certain outcome.”
The Bank Secrecy Act (“BSA”) and money transmitter rules may apply to some actions related to “convertible” digital currency. The Network for Financial Crimes Enforcement (“FinCEN”) addressed convertible virtual money, which it claimed either has an equal value to real currency or serves as a replacement for real cash, in its inaugural interpretative guidelines on virtual currencies.
Issues with Blockchain-based Virtual Worlds Could Be Similar
There have been several virtual worlds built on the blockchain. An example is https://crypto.games, which used an ICO to raise $26 million. According to the platform’s whitepaper, users of Decentral land can use MANA tokens to buy real estate and other digital assets. Additionally, users may produce, consume, and profit from content and apps. Legal problems have arisen with “conventional” virtual worlds over time.
Although they come with specific legal issues, cryptocurrency-based gaming such as https://crypto.games and collectables have a lot of development potential. Awareness of pertinent concerns and cautious structure should prevent many legal hazards.