The metaverse is starting to spill a lot of ink. In these virtual universes, the concept of crypto-assets and NFTs is the subject of great interest and plays an important role. Financial institutions settle there. But which rules do they have to comply with? The question then arises whether the regulations that apply in the real world will also apply in these virtual universes.
The European regulation MiCA (Markets in crypto-assets regulation) is a proposed European regulation that aims to regulate certain crypto-assets that are considered to be outside the scope of current traditional regulation. The main purpose of this European regulation is to provide a first real legal definition for crypto assets.
A crypto asset can then be defined as a digital representation of a value or rights. This digital representation can be electronically transferred and stored using distributed ledger technology (DLT).
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The scope of MiCA is aimed at issuers of certain types of crypto-assets or certain activities related to crypto-assets. Trading platforms are also targeted. That is why, for example, we are not going to regulate bitcoins as such, but rather the platforms that make it possible to buy or sell bitcoins. Some existing rules that already apply to certain crypto-asset approval activities will be adapted to crypto-assets under MiCA. We are thinking here, for example, of the governance rules, those for payment institutions or the rules specific to investment services. MiCA will deal with tokens that are not yet subject to specific regulations.
And in the metaverse?
“It is important to note that the metavers remains a rather vague concept at the moment. While some projects are currently in development, it is not certain that these constitute the final form of what will ultimately be the metavers. So at this stage one can only but make assumptions about the possible application of legal rules. In this regard, it can be assumed that, if real financial services were to be done in metaverses and these services had to focus on crypto assets, the MiCA regulation could also apply on these metaverses. It should be noted that MiCA does not distinguish between the real universe and the virtual universe. Situations are analyzed on a case-by-case basis to see whether the conditions of application of this regulation are met. The fact that they are in a virtual universe carried out does not, in principle, exclude it from the scope of this Regulation.says Jean-Christophe Vercauteren, lawyer at Simont Braun.
Note that MiCA is not written explicitly for metaverses. And that will undoubtedly raise a lot of questions! However, this draft regulation is still in the adoption process. He could then adapt to the new situation of the metaverses. But this concept of a virtual universe is itself in a stage of pregnancy. What will these universes be tomorrow? Regulations will undoubtedly have to adapt to the evolutions of these metaverses.
In addition to MiCA, activities offered in metaverses may be subject to Anti-Money Laundering (AMLD) laws. “If entities providing their services in metaverses were considered entities subject to anti-money laundering obligations, this would raise a number of questions. How to identify clients of financial transactions in the metaverse? Who is behind an avatar?” notes Jean-Christophe Vercauteren.
Currently, European anti-money laundering legislation, known as “AMLD V”, involves the actors passing through capital of dubious origin. In this way an appeal is made to all economic actors through which payment flows pass. The list is constantly being expanded and today banks, but also, for example, lawyers or notaries, accountants or tax consultants are affected by this law. Tomorrow we could integrate companies that offer services into the metaverse.
In the metaverse, other regulations may apply. In Belgium, the Royal Decree of 8 February 2022, taken in application of the anti-money laundering legislation, requires certain service providers linked to cryptocurrencies to be regulated. The FSMA (Financial Markets Supervisory Authority in Belgium) announces that from May 1, 2022, the activities of certain service providers related to virtual currencies will be regulated.
These service providers will have to meet a series of conditions related in particular to their professional integrity and compliance with anti-money laundering legislation. It is prohibited for service providers under the law of a State outside the European Economic Area to offer certain services related to cryptocurrencies on Belgian territory. . This Royal Decree focuses in particular on trading platforms between virtual currencies and legal currencies, as well as service providers offering services in terms of private cryptographic key storage wallets (“wallet providers”) based in Belgium. If, in a metaverse, a company established in Belgium were to offer this type of product or service in Belgium, it would fall under the provisions of this Royal Decree. It will still be necessary to establish that the services provided in a metaverse are located in Belgium.
In addition, as more traditional financial services develop and multiply in these virtual universes, different rules may apply. “If a financial institution were to move to the metaverse and provide the same kind of services as they do in the real world, it’s possible that some traditional regulations would apply. For example, if a bank meets virtually with customers in a metaverse and provides investment advice there, it may be subject to regulations under certain circumstances, such as MiFID (Markets in Financial Instruments Directive).”adds this lawyer.
Solutions and services to support virtual worlds are accessible worldwide. However, they must abide by the requirements of local jurisdictions and rules regarding trading and payments.
Then the question arises about the governance of these virtual communities: who sets the rules in virtual worlds? Who will rule over them? Who will enforce them? After determining which rules will be in effect in these universes, we will have to answer the question of who in the metaverse will ensure compliance with these financial rules. In the financial field, the supervisors of the financial markets will in principle have to keep an eye on things. These are the FSMA and the National Bank of Belgium in Belgium and the AMF and the ACPR in France. “Today, the concept is still vague. The metaverse project is in the works. Regulations and regulators will eventually adapt to this new “reality”. But at this point, the application of existing regulations to metaverse practices will certainly be the subject of much debate. It should also be noted that the delicate issue of the management and protection of personal data will also be addressed. Everything will happen digitally in these universes. Data is exchanged, behavior becomes visible and possibly analysed. Care must be taken to protect this data.Jean-Christophe Vercauteren warns.
User identification and privacy protection measures will indeed be essential for interacting and executing financial transactions. By extension, if these were to take place in a metaverse, we would certainly have to think about how to ensure the identity of the users.
It will also be necessary to agree on a regulatory, tax and accounting treatment regarding real estate transactions and digital ownership in this virtual world.
-> Consult on MoneyStore the complete file “Metavers: challenges, risks and opportunities of a reality in the making”, by Brigitte Doucet, Manager of the Regional IT site and Isabelle de Laminne, Manager of the MoneyStore.be blog
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 Finally a settlement for cryptocurrency providers in Belgium!