Looking at the next frontier of technology, the metaverse, big technology-focused companies seem to be leading the race to create the perfect virtual ecosystem. While fascinating, this idea of a shared, immersive digital space has raised concerns within European Union (EU) regulatory bodies. They have pointed to the risk of a possible monopoly and warn against harming smaller companies and neglecting core European values.
A leaked draft document recently raised these concerns and revealed the proactive stance of the European Commission. Under the draft, the Commission champions the cause of regulation tailored to innovative technologies to ensure a secure future for the Metaverse. The document, expected to be released on July 11, underscores: “Virtual worlds offer unprecedented opportunities in many areas of society. This technological shift also brings new forms of global governance.”
Main provisions in the draft document
The draft document, seen by Coindesk, is an in-depth guide to the EU’s intentions, and indicates that changes are needed in the existing legal frameworks. Intention? To pave the way for the formation of new entities similar to decentralized autonomous organizations (DAOs), which would oversee metaverse activities.
The European Commission focuses on several key areas: health, education and culture. The vision is a community-driven “web4”, requiring a commitment to interoperability at all levels. According to the draft, the future of the internet should respect EU values and rules and create an “open, safe space”. To achieve this, the document encourages international cooperation on technology standards, identity management and censorship.
“The Commission will support the establishment of a technical multi-stakeholder governance process to address key aspects of virtual worlds and Web4 that are beyond the remit of existing internet governance institutions,” the document reads.
Balancing exercise: users, companies and regulators
When it comes to digital asset regulation, the EU has made it big steps, setting a precedent for other jurisdictions. The Markets in crypto assets regulation (MiCA) is a good example of their leadership. This draft legislation aims to regulate cryptocurrencies, stablecoins and digital asset exchanges. It has been hailed as a milestone in industry regulation. Meanwhile, executives in the United States continue to advocate for more explicit regulatory guidance.
This new reverse document from the EU seeks balance between users, businesses and regulators. It emphasizes user freedom and interoperability while maintaining strict standards of data privacy, protection, and gender-based laws. In addition, the EU plans to roll out “sandboxes” in the first quarter of 2024 to test smaller projects under its rules and introduce a Virtual World Toolbox.
For businesses, the strategy suggests the creation of specialized web3 hubs focusing on gaming, virtual reality and related technology. This is coupled with an emphasis on forming partnerships with key companies to facilitate the development of a metaverse roadmap across the jurisdiction.
In terms of challenges, a prevalent concern within metaverse spaces is the emergence of contained “walled garden” networks as the industry expands. In response, the EU has stated that it will continue to work with companies to promote an open web 4.0. This foresight shows their commitment to ensuring the metaverse adheres to their core values even as it evolves.
