With the start of the new year, the ArentFox Schiff Metaverse Industry team reviews 10 of the most pressing legal issues for companies in 2023.
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- The Long Crypto Winter. As the crypto bear market approaches its 15th month and crypto bankruptcies pile up, some are predicting the Metaverse and blockchain will go down too. But the Metaverse and blockchain are bigger than crypto. Companies including Starbucks, L’Oreal, and Nike have moved beyond the buzzwords to create powerful new tools to engage consumers and generate revenue. Whether through blockchain-based loyalty programs, communities of digital creators, or new e-commerce platforms, these companies are demonstrating the value and utility of these technologies. Will the crypto winter keep all of web3 in a deep freeze or will 2023 be the year that companies move past the hype and start building practical applications that boost their bottom line?
- The Securities Issue. The US Securities and Exchange Commission (SEC) has adopted a strategy of developing the law applicable to NFTs and other tokens via aggressive judicial enforcement activity versus rulemaking or the issuance of guidance. SEC Chairman Gary Gensler has consistently asserted that many tokens trading on platforms meet the definition of “securities,” and thus fall within the scope of SEC regulation. The position recently found support in the US District Court for the District of New Hampshire, which concluded on a motion for summary judgement made by the SEC that LBRY, Inc. offered and sold its native digital token, LBRY Credits (LBCs), in violation of Section 5 of the Securities Act of 1933. The SEC’s aggressive posture, together with significant regulatory uncertainty, has likely discouraged many large brands from entering the market. The outcome of pending litigation, including a lawsuit against NFT developer, Dapper Labs, and future enforcement settlements between the SEC and the issuers of tokens and/or those that facilitate…
