April 5, 2022
If you're buying an NFT, are you buying a copyright?
If you bought a piece of virtual land, can you include it in your last will?
If someone is caught for stealing cryptocurrency, in which jurisdiction will they be tried?
Web 3.0 is here. And things can get complicated.
The next iteration of the internet is about to take the world by storm. Web3 technologies such as NFTs, Cryptocurrency, DAOs, and metaverses will be adopted by individuals, companies, and governments today and in the coming decade. It is important for law firms to understand the implications and the opportunities this new technology presents.
The rise of Web3 is estimated to boost global GDP by 1.76 trillion dollars over the next ten years. Lawyers dealing in internet-related matters are fast becoming the most in-demand legal professionals in the world. As cryptocurrencies, NFTs, and the blockchain go mainstream, there could be a higher demand for Web3 lawyers to address the regulatory gray zones.
Law firms know how to grasp business opportunities and those who can adapt, understand, and leverage this new way of doing business on the internet, have the potential for tremendous growth. Web3 is a rapidly evolving area of the law that needs legal education and services. Now is the time for the attorneys to strategize and be prepared for what is coming and not get left behind.
Many of the platforms we use today are owned and controlled by the tech giants that use personal data for commercial purposes. One of the biggest concerns for individuals and businesses is data privacy.
Web 3.0 is built upon blockchain technology, allowing data to be decentralized and individually owned. This is different from Web 2.0, where data is stored predominantly in centralized repositories.
Investors are attracted to the space, looking for new ways to generate profit, but blockchain technology is more than just a platform for trading and investing. This entirely new landscape will change the way users interact, exchange digital assets, and complete transactions.
One of the most significant disruptions will be the way people can gather online and form their own communities with their own rules of governance.
The next stage of web evolution will make the internet accessible to everyone at any time and aims to give control of data and ownership back to individual content creators, startups, and small businesses through the use of blockchain technology.
Blockchain is the most significant new technology since the internet. It is a distributed ledger for recording transaction data. Transactions are verified and time-stamped, and the data cannot be altered. Popular applications of this technology include cryptocurrencies and NFTs.
NFTs (non-fungible tokens) are a convenient way to track the ownership of digital assets and track transactions. Some of the legal issues that can arise with NFTs relate to licensing and joint ownership of an asset. There are a growing number of lawsuits based on these issues currently in the courts.
Alongside NFTs, metaverses are quickly becoming a part of global corporations’ business and marketing strategies. Metaverses are a network of virtual worlds that have the potential to change the way we socialize and work, but they also raise many legal issues concerning governance, IP protection, and infringement.
In Web3, where nothing is centralized, governments and companies need to know how to handle this developing technology and the risks involved. Normally, when a company’s rights are infringed upon, the injured party will seek legal representation, leading to compensation and preservation of copyright or ownership. Web3 is independent of any central governing authority, creating confusion around legal jurisdiction.
There is a common misconception that the cryptocurrency and blockchain space is unregulated. This claim is frequently published in the media. A wide variety of laws and regulations have been introduced since Bitcoin’s inception in 2009, but in most cases, the gray areas are there because of how we understand how the current regulations apply to activities that are using the blockchain network.
An important consideration for law firms is how governments will regulate this space going forward and the possible implications on existing legal frameworks.
Governing bodies and Web3 businesses are grappling with regulation uncertainty and protection rights - from digital assets as financial products to the emergence of SAAS companies. Existing law firms struggling to keep pace with emerging technology will need to put time and effort into training their staff and may need to consider adding a Web3 practice area to their current firm’s structure.
Although the space is rapidly evolving, legal advisors are encouraged to keep pace with the changes.
This new technology and way of doing business will require a new generation of well-qualified, informed, and technologically equipped lawyers to serve in these decentralized systems.
Law firms need to understand Web3 technology and legal considerations such as NFT and DAO legal structuring, regulatory challenges, governance, and ownership or they risk being left behind and missing out on important revenue streams.
Change is happening fast, and law firms and attorneys will need to keep pace.
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ByteBao is a leading legal and business consulting firm that helps Web3 and blockchain clients comply with the legal and ethical standards required in the Web3 landscape. We also train Web3 attorneys so they can explore projects and careers at the intersection of technology and the legal field.
Jamilia Grier is a serial expat, and attorney-entrepreneur who has spent over a decade in Asia, leading legal and compliance teams in multinational corporations. She currently is the Founder & CEO of ByteBao, a Web3 ecosystem aimed to help startups maintain innovation and brand reputation through compliance.
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