Making the law in blockchain games

The video game industry is a massive, ever-growing, global phenomenon. In 2021, it was worth an estimated $180.3 billion, a figure that is projected to grow to $300 billion by 2025. Although the industry has seen steady growth for years, a new development in recent months is set to shake things up even more. : blockchain game.

What are blockchain games? Simply put, they are video games that use blockchain technology as a basis. But what does that really mean? And why are people so excited about them? Let’s take a closer look.

Blockchain technology is the backbone of cryptocurrencies such as Bitcoin and Ethereum. It is an open source distributed database that enables secure peer-to-peer transactions without a third party such as a bank or financial institution. This makes it perfect for video gaming, as trust and security are crucial elements for successful online gaming.

What Laws Affect Blockchain Games?

Blockchain games are subject to the same laws that apply to all other types of video games. However, since blockchain games are a relatively new phenomenon, no laws specifically governing them exist. That being said, it is important to be aware of the laws that apply to video games in general and how blockchain technology may affect those laws.

1. Gambling laws

Gambling laws are perhaps the most important thing to be aware of with this form of gambling. Many blockchain games have in-game currencies—used to purchase items, unlock features, or represent a stake in the game’s economy—that can be bought, sold, or traded for real-world money. As such, there is a risk that these games could be used for illegal gambling.

In the United States, for example, gambling is regulated at the state level, so each state has its own laws governing what is and is not considered gambling. Some states have very strict laws, while others are more lenient. As such, it is important to be aware of the gambling laws in your state or country before playing blockchain games.

2. Token marketplaces such as security exchanges

Blockchain games can also potentially run into trouble because many of them have features similar to security exchanges. As currency, many of these games use tokens that can be bought and sold on token marketplaces. These tokens can sometimes be traded on cryptocurrency exchanges or used to raise money through initial coin offerings (ICOs). These token marketplaces can be considered security exchanges, meaning they must be registered with the Security and Exchange Commission (SEC).

In the US, the SEC regulates all securities trading, which includes anything that can be traded for money, such as stocks, bonds and cryptocurrencies. Although companies may be required to disclose certain information to investors and impose restrictions on who can purchase tokens, the SEC has not yet taken any action against these marketplaces, as the legal classification of these tokens remains a matter of debate in many jurisdictions.

3. Act on copyright and intellectual property

Like all video games, blockchain games are subject to copyright and intellectual property laws. These laws protect game developers’ creative works, including the game’s code, art, and music.

These laws are important because they give game developers a way to stop others from copying or stealing their work; they can also be used to prevent players from modifying (“modding”) the game in ways that the developers do not approve of.

Last word

Blockchain games are a relatively new phenomenon and as such are still subject to many of the same laws as other video games. However, because they use blockchain technology, a few additional laws could potentially apply to them. Since the exact law is currently ambiguous, it is important to know the laws that apply to video games and how blockchain technology may affect them.

Suppose you are interested in learning more about the legal implications of blockchain gaming. If so, I recommend listening to the podcast episode “Season 2, Episode 9: How to Make Money Playing Games on a Blockchain (with Neeraj Kashyap).”

Olga V. Mack is VP of LexisNexis and CEO of Parley Pro, a next-generation contract management company that has pioneered online negotiation technology. Olga embraces legal innovation and had dedicated her career to improving and shaping the law of the future. She is convinced that the legal profession will appear even stronger, more robust and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations expert, start-up advisor, public speaker, assistant professor and entrepreneur. She founded the Women Serve on Boards movement, which advocates for women to serve on corporate boards of Fortune 500 companies. She wrote Get on Board: Earning Your Ticket to a Corporate Board Seat, Fundamentals of Smart Contract Security, and Blockchain Value: Transforming Business Models, Society and Communities. She is working on Visual IQ for Lawyers, her next book (ABA 2023). You can follow Olga on Twitter @olgavmack.