There is a need for laws to govern the metaverse, and S’pore is already taking steps towards it

By November 17, 2022The Sandbox
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metaverse regulation

Anything can be made virtually possible in the metaverse. From purchasing real estate to shopping for products and attending concerts, the metaverse has the potential of becoming an extension of reality itself.

With more people trying out metaverse platforms such as The Sandbox and Horizon Worlds, the metaverse is gradually integrating digital realms within real life.

In fact, two Singaporeans recently tied the knot in the metaverse, marking the first ever metaverse wedding on The Sandbox.

the Sandbox wedding
Singaporean couple, Clarence and Joanna’s wedding in the Sandbox / Image Credit: Smobler Studios

The virtual universe, which currently comprises an estimated amount of over 10,000 virtual worlds both active and in development, even has the potential to create job opportunities within its platform, such as tour guides, VR wedding planners, and decorators.

As the adoption of the metaverse becomes more widespread, the global market value of the metaverse is expected to rise from US$47.48 billion this year to at least US$678.80 billion by 2030, according to the Metaverse Industry Report.

Singaporeans are treading cautiously in the metaverse

While the metaverse is expected to pave the way towards a new future of technology and interconnectivity, Singapore, however, sees doubt in its capabilities.

In a study done by Milieu Insights, compared to other Southeast Asian countries, Singaporeans tend to feel more uncertain and sceptical about the metaverse.

Singaporeans doubt the potential of the metaverse
Image Credit: Milieu Insights

An overwhelming 63 per cent of respondents who selected at least one negative emotion towards the metaverse expressed their concerns over data security and privacy.

In addition, 57 per cent of the respondents indicated that the metaverse may cause an increase in undesirable behaviours, while 52 per cent of them cited concerns over the possibility of an increase in cyber crimes and real world crimes.

These concerns are not ungrounded. In a world where everything and anything is possible, what would stop people from conducting illicit activities?

Besides, there are almost no consequences as there are no targeted legislation addressing the metaverse… yet.

Obtaining the full experience of the metaverse comes at a cost

As compared to the traditional internet, the metaverse is able to collect a plethora of information from its users.

While a VR headset is not necessarily required to enter a metaverse, using other devices such as a PC to navigate through a metaverse may limit functionality. Hence, to obtain the full experience of a metaverse, a VR headset proves to be essential.

That being said, wearable tech such as the VR headset pose a barrage of privacy concerns due to their in-built motion sensors which detect the facial dynamics of the user.

For example, Meta’s Quest Pro has integrated a set of five inward-facing cameras to track users’ eye movements and facial expressions, allowing avatars in the metaverse to reflect their facial expressions such as smiling, and winking.

Meta Quest Pro
Meta’s Quest Pro / Image Credit: Meta

Meanwhile, according to the Information, Apple plans to integrate iris scanning tech for log-ins and payments into its rumoured mixed reality headset.

While the integration of biometrics tech into these headsets are essential for their core functionality, the amount of sensitive data collected by these devices may exacerbate privacy risks.

Researchers at Rutgers, the State University of New Jersey, have found that hackers could potentially use these headsets to record the user’s facial dynamics and to steal sensitive information communicated through voice-command, such as credit card data and passwords.

These attacks are known as “eavesdropping attacks” where perpetrators passively tune in to network communications and obtain access to private information and sensitive data.

And these threats don’t just stop there.

Fake websites, stolen land, and wash trading

The Sandbox’s SAND / Image Credit: Medium

The metaverse today has integrated its own fully functioning economy through the use of cryptocurrencies.

Currently, most virtual worlds within the metaverse functions its own digital currency — SAND is the utility token used throughout The Sandbox ecosystem, while the MANA token is the in-game currency of Decentraland.

These currencies can be used to purchase virtual plots of land as well as clothing and accessories for avatars (often referred to as skins), among other products.

Skins available on Decentraland / Image Credit: XXX

As with any other financial systems, there are risks and financial crimes that come with the transactions made in the metaverse.

For one, the digital currencies used to conduct these transactions have the potential to be hacked. About US$2.2 billion in cryptocurrency has been stolen from DeFi projects this year, according to crypto tracking firm Chainalysis.

Aside from the risk of getting hacked, phishing scams, money laundering, and wash trades are also rampant in the metaverse.

To compromise crypto assets in the metaverse, phishing scams in the form of fake sites imitate the login panel of a legitimate wallet provider, an NFT market or a metaverse.

Earlier in May, CNBC reported that investors across the US had their land stolen from the metaverse as their user credentials were stolen through phishing attacks.

In addition, Decentraland also saw an influx of fake sites aiming to mislead its users, leading the company behind the platform to work with a number of IP protection firms to take down these websites.

According to a report by Elliptic, the platform has managed to take down two websites, 24 domains, and five social media accounts.

Search results for Decentraland / Image Credit: Elliptic

Aside from that, the metaverse may also present the opportunity for illicit wash trades, where investors sell their own assets to themselves or to co-conspirators.

Wash traders can either sell their assets at an undervalued amount to report a loss for taxing purposes, or overvalue their assets to drive up the value of their tokens and sell them for a higher amount.

Currently, wash trading is rampant in crypto markets. According to Elliptic’s report, a reported 95 per cent of all activity on NFT marketplace LooksRare are attributed to wash trading, with an estimated volume of up to US$8 trillion globally in 2021.

With NFTs enabling the property transactions that drive the metaverse, acting as a proof of ownership, what would stop wash trading from happening in the metaverse?

The metaverse is plagued with moral issues

Financial and privacy risks aside, the nature of the metaverse which enhances the degrees of freedom people have allows for abuse — real life crimes get translated into the metaverse.

From sexual harassment, to vandalism, and even the murder of digital avatars, a surfeit of moral issues have the potential of plaguing the metaverse.

According to the Center for Countering Digital Hate, users are exposed to abusive behaviour every seven minutes in virtual platform VRChat.

A nightclub in VRChat / Image Credit: The Metaculture

Apart from VRChat, other virtual platforms are also no exception to this.

For instance, a beta tester of Meta’s Horizon Worlds faced sexual harassment in the virtual world even before its launch.

“Sexual harassment is no joke on the regular Internet, but being in VR adds another layer that makes the event more intense. Not only was I groped last night, but there were other people there who supported this behaviour which made me feel isolated,” posted the beta tester on the Horizon Worlds beta testing Facebook group.

Reports of sexual harassment are becoming increasingly common in the metaverse, as pointed out by a report published by nonprofit advocacy group SumOfUs.

The report also included accounts of substance abuse, gun violence, and hate speech, as well as the presence of minors on Horizon Worlds, a platform made for users above the age of 18.

As abusive behaviours and individuals run rampant across metaverse platforms, is the metaverse truly capable of shaping the future of technology?

Does the metaverse need regulation?

Image Credit: the Sandbox

“As web3 applications begin to track our eyes, facial expressions, gait and vital signs, we will have to look to policymakers to help regulate privacy and data capture in new ways,” said international technology lawyer Kay Vasey, and founder of creative technology studio MeshMinds.

Kay suggests that metaverse creators need to take on the responsibility to adhere to ethical practices while designing their virtual experiences. “Big tech firms who are capturing and processing such data also must allow for people to be able to opt-in and opt-out [of the data collection] in the same way as we do today.”

Meanwhile, as the metaverse amplifies virtual hate, Kay revealed that some metaverse platforms have already rolled out physical distancing measures to protect users.

Horizon Worlds’ four feet physical boundary / Image Credit: Meta

For example, following sexual harassment incidents in Horizon Worlds, Meta has implemented a four feet boundary between avatars as a default setting, to avoid other avatars from invading personal spaces.

Users can also choose to opt out of the physical distancing, but Meta still provides them with a small personal boundary to prevent unwanted interactions.

Besides Meta’s initiatives, other companies have also been working towards creating a safe space in the metaverse.

Bell Beh, former lawyer and co-founder of AR solutions company BuzzAR, has stated that the company has been working and implementing AR gestures in metaverse platforms which enables users these worlds to give a “thumbs up” when they give consent, or an “ok” sign to delete their data.

Although these companies have placed these measures to prevent abuse, the perpetrators of these crimes in the metaverse still go unscathed. There is still a lot more to be addressed, and more needs to be done.

Policymakers and regulators will need to carefully monitor issues in these connected virtual worlds, and codes of conduct must be established. Implementing rules, regulations and laws governing the metaverse will be a fundamental step as we venture into the metaverse in order to protect the rights and safety of consumers and creators alike.

– Kay Vasey, founder of MeshMinds

However, regulating the metaverse still poses more questions than answers.

Who exactly can users go to when they are wronged? Which jurisdiction applies to metaverse crimes? And how can laws be applied when the metaverse is still rapidly evolving?

Are pre-existing laws enough to address issues within the metaverse?

Epic Games’ Unreal Engine platform / Image Credit: Epic Games

According to Blockchain Council, there are currently no specific laws regulating the metaverse. However, general laws that apply to the Internet can also apply to Metaverse, and these include copyright laws, defamation laws, contract law, and tort law, among others.

But are these laws enough? And can they be applied in the same way as in real life? For example, will the sentence for an online murder of an avatar be the same as a murder carried out in real life?

As the metaverse is still in its early stages, Kay explained that when cases of “metaverse crimes” are brought before the courts, existing laws in the “offline world” have to be applied first, to see if these laws can be adapted or reused.

Even for social media and the Internet, laws are constantly evolving to provide more protection to consumers. For example, the Singapore government recently passed a new legislation requiring social media sites to block access to harmful content within hours to further strengthen online safety on Web2.0.

Hence, while the application of current laws may be adequate for some cases of abuse in the metaverse, it still needs to be monitored and if need be, new laws need to be erected — or old laws need to be modified — to address issues within the metaverse.

Laws are never static, and need to constantly evolve to address new societal issues.

Singapore’s efforts towards creating a safer metaverse for everyone

Bell views that the government should be a part of the virtual community to ensure that there is law and order within the metaverse.

In fact, the Singaporean government has been very proactive in co-creating the governance in the metaverse, she said.

Minister Edwin Tong speaking at TechLaw Fest 2022 / Image Credit: TechLaw Fest 2022

Earlier this year at the TechLaw Fest 2022, Mr Edwin Tong, Minister for Culture, Community and Youth, and Second Minister for Law, shared that the Singapore government is currently studying the characteristics of the metaverse, as well as any attendant and legal issues that will arise from having an adoption of the metaverse in the legal world.

Minster Tong acknowledges that the law will definitely be challenged in a borderless virtual world.

In line with Singapore’s efforts to dampen the challenges of the metaverse, the National University of Singapore also held a conference recently, where business leaders, law practitioners, academics and policymakers came together to discuss the relevance and application of existing law and policies on matters concerning privacy in the metaverse space.

The ‘Understanding the Metaverse: Law, Policy & Practice’ conference held by NUS / Image Credit: NUS

The conference was supported by Meta and law firm Rajah & Tann, and aimed to shed light on the legal and policy issues associated with the metaverse.

Among its attendees was Rahimah Abdulrahim, the director of public policy, Southeast Asia, at Meta, who finds that partnerships between companies, creators, developers, and policymakers will be a crucial part of how future challenges in the metaverse can be navigated.

“Through this, the development of the metaverse will be guided by values such as economic opportunity, privacy, safety, and equity and inclusion,” she said.

A call for proposals for research projects was launched during the conference. These projects are to be funded by the Meta X-RAY Programs and Research Fund, a two-year, US$50 million investment by Meta aimed at building the metaverse responsibly.

According to Professor David Tan of NUS Law, areas of research can include frameworks for bystander privacy, particularly in the context of wearable devices such as augmented reality smart glasses, as well as biometrics and human-computer interaction privacy models, among others.

Aside from the Singapore government, other governments and institutions have also convened to bring about a metaverse that is safe and accessible for everyone.

The World Economic Forum (WEF) launched Defining and Building the Metaverse, a multi-stakeholder initiative to develop and share actionable strategies for creating and governing the metaverse at its annual meeting in Davos 2022.

Through the initiative, members have committed to recommending governance frameworks for interoperable, safe and inclusive metaverse ecosystems. This entails finding harmonisation between regulation and innovation in order to develop interoperability while preserving user privacy and safety.

The forthcoming of a new digital era

Roblox’s avatar creation catalogue / Image Credit: Roblox

That being said, the metaverse still has the potential to bring out more good than bad.

I am a big proponent that the metaverse will open many opportunities and inspire our younger generations to continue inventing new ways to improve our world.

– Kay Vasey, co-founder of MeshMinds

She believes that the metaverse and the era of web3 applications will usher in a new digital age that will change every aspect of our lives — “from the way we teach, learn, play, socialise and work”.

Citing a study by Accenture which found that learning effectiveness is significantly increased by 76 per cent when using virtual teaching methods as compared to traditional methods, Kay emphasised that this will only further propel the integration of the metaverse into our daily lives.

Taking into account the drawbacks of the metaverse, she affirmed that the key to navigate the emerging metaverse is through digital wellness and education, much like how we are educating people on cyber security and data protection in this social media era.

“When we become aware of the pros and cons of the digital platforms, it is easier for us to understand how to best use the technology in a manner that would benefit our people,” she said.

Featured Image Credit: Twenty20

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