What law actually applies in the Metaverse?

Christian Solmecke: Recently, I’ve actually heard more and more arguments that the Metaverse project is decentralized and therefore no law applies. This view is of course wrong. In addition to the law of the data subject’s home country and the law of the platform operator, international agreements such as the UN Sales Convention can also regulate legal relationships on a contractual basis. For example, Metaverse’s own license agreement could regulate the legal relationship, which each user should accept and abide by.

BTC-ECHO: What should be taken into account with regard to data protection and copyright? What specific role does blockchain play in copyright issues?

Christian Solmecke: Today, we can only guess what opportunities and business models will develop in the metaverse. However, the legal issues that will arise will be just as diverse as the possible uses of the metaverse itself. Finally, there will be many data protection issues, since completely new data, such as facial expressions and gestures the user in the metaverse, as well as parts of their private environment via VR glasses in the real world, are processed. The question of what data protection responsibilities are shared by platform operators and companies in the metaverse will also be an exciting question yet to be answered. In this respect, it will become all the more important to inform users in an understandable and simple manner about the respective processing of their data.

In future, data protection declarations should therefore no longer be long in pages, but should be quick and easy to understand. I see here a major challenge ahead of us. Another major task will be to ensure the secure transfer of data around the world. Since the metaverse will take place across countries and continents, a global minimum level of data protection will need to be guaranteed in the future. From the perspective of copyright, the question arises as to how a buyer can be informed in a way that complies with the law of the rights that he acquires with the purchase of his digital object and the restrictions of use that exist. . And what exactly should be taken into account when replicating real structures or other protected assets in the metaverse? What to consider when embedding digital assets as NFTs. Given the complexity of the issues, it will probably be a long time before the metaverse really becomes part of our daily lives.

BTC-ECHO: Are there internal rules in the metaverse? Do I have to pay tax on rental income?

Christian Solmecke: Even in virtual space, there is ownership or possession, which is why owners, tenants or users authorized by the corresponding contracts invoke property rights parallel to the “real world” when exercising domiciliary rights. So you actually have virtual direct debit rights. Technically, virtual lands are non-fungible tokens (NFTs). And, of course, the financial authorities intend to levy taxes in virtual worlds as well. For example, the Cologne Finance Court ruled in 2019 that rentals of NFT properties in Metaversen could be subject to VAT. Users should therefore exercise caution and seek comprehensive advice beforehand.

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This article was previously published in the March issue of BTC-ECHO Magazine.