China is pioneering a move into the metaverse – a 3D online shared space – and the country is establishing regulatory standards to ensure the safety and security of users. The announcement of this particular move by the Chinese government marked a major step forward for the virtual world industry and will have far-reaching consequences not only in China but around the world. This article will take a look at what these new regulatory measures mean for the future of the metaverse.
1. Setting the Stage for China’s Regulatory Standards in the Metaverse
China’s regulating of its digital industry, namely tackling issues such as copyright enforcement, data privacy, and anti-monopoly laws, is increasingly establishing itself as a model for virtual regulation around the world. This is particularly evident in regard to the new trend of developing “metaverse” technology which offers extended virtual worlds similar to the ones seen in films such as Ready Player One.
To that end, China is in many ways ahead of the curve. The country has shown a major focus on regulating the metaverse, with the Ministry of Industry and Information Technology leading on policy-making in this space. The standards put in place have even gone beyond the frameworks utilized in traditional gaming, with the government requiring a social credit system to verify the identities of those engaging in the development of virtual realities. Other policies include:
- Stronger Enforcement: Anti-piracy measures are being introduced to prevent the illegal use of metaverse content.
- Data Storage Limits: The Chinese government is mandating limits on the amount of user data that can be collected and stored.
- Accountability: Companies must prove that their projects are compliant with the latest industry policies.
China is setting the standard for how countries may address the implications of metaverse technology. Other nations – both developing and established – are increasingly paying attention to the approach taken by the Chinese government. It is anticipated that the nation’s regulations may become a template for rules in other places – particularly as the global rate of metaverse development accelerates.
2. Exploring the Scope of the Regulations
In the previous section, we discussed the regulations and the implications of non-compliance. This section will take a closer look at the scope of these regulations and what areas they cover.
The regulations are enshrined in California’s Green Chemistry Initiative (GCI) and provide enforcement of the laws set forth by California’s Safer Consumer Products (SCP) program. All companies who manufacture, import, or sell products in California must adhere to the regulations set by both these programs. Generally, businesses must:
- Examine the chemical substances used to manufacture their products
- Assess the risk posed by these substances
- Choose alternative substances when possible
- Assess the environmental and health risks of potential alternative substances
- Comply with any other SCP regulations
In addition to standard products, the regulations also include products covered by California’s Proposition 65 that affects food and other consumables. Proposition 65 requires businesses to include “clear and reasonable” warnings on products containing or releasing harmful chemicals. As with the other regulations listed above, failure to comply with any of California’s Proposition 65 laws could result in severe financial penalties.
3. How China’s Regulations will Impact the Global Metaverse Landscape
In the past several years, China has become an influential player in the metaverse landscape, especially due to their unique approach to regulations surrounding this virtual world. This has both a potential positive and negative impact on the global metaverse.
In terms of positive potential, China has recently introduced regulations that help to distinguish the boundaries between a real and virtual world, such as tax and income-related regulations. On the other hand, China has also taken a stricter stance in terms of monitoring user conduct. This can lead to potential restrictions on virtual world freedom for global users in the form of:
- Limitations on Privacy: China has implemented limits on what content can be published or shared on the virtual world, in order to protect users from scams and other malicious activities.
- Tighter Restrictions on Gameplay: China has also adopted certain regulations that seek to control the types of games and activities that are allowed within the virtual world.
- Alarming Tax Regulations: China has extremely stringent taxation regulations, which can be confusing and difficult to abide by for virtual world operators from around the world.
At the end of the day, China has a tremendous potential to shape the global metaverse landscape, both for better and worse, depending on how its regulatory policies are developed and enforced. This could potentially affect the way users interact with the virtual world – and the way the virtual world is regulated around the world.
China’s move to create regulatory standards for the metaverse is the latest step in the country’s roadmap to put itself at the forefront of this technology. With the rising popularity of virtual and augmented reality and the potential these technologies have for businesses and consumers alike, China is poised to lead the global development and deployment of the metaverse. Only time will tell how these regulatory standards will be put to use in this ever-evolving industry.
