A Introduction To Japanese Law On NFTs & The Metaverse

Major changes in people’s lives and economic activities may happen in the near future due to the development of the metaverse, which is attracting global attention and investment recently. Although there is no unified definition for the term “metaverse”, basically, it is a virtual space on the Internet in which people can participate and carry out various acts through their avatars, such as engaging in social activities and even having a job and earning a living. Many industries are trying to be early adopters of the metaverse. Among others, sports is considered to be a promising industry because it is experiential in nature and highly compatible with the metaverse, which enables near-realistic experiences in virtual space. The utilization of the metaverse could be the key to further success in the sports industry as an opportunity for creating innovative fan experiences and improving fan engagement.

NFTs (non-fungible tokens) are a form of digital assets based on blockchain technology, which enhances the economic value of digital assets by assuring their uniqueness and authenticity. NFTs are not just non-fungible data or digital assets; they also have the potential to be a critical technology that can act as a building block in future information technologies, such as metaverse and Web 3.0 (i.e. by providing a form of bearer property rights over digital items). Not surprisingly, sports are also greatly compatible with NFTs because sports-related content has an affinity for the scarcity and other key characteristics of NFTs. Many digitally collectible NFTs have already been released by major professional sports leagues all over the world and are sometimes in high demand.

The metaverse and NFTs are both relatively new technologies and concepts that were not necessarily envisioned by the existing legal system. There is currently no Japanese law that is specifically designed to regulate the metaverse or NFTs, and their legal implications are not necessarily clear. There are some voluntary guidelines published by industry groups, and it is critical to keep an eye on the development of these guidelines as well as governmental regulations.  

This article explains recent developments in the regulatory framework relating to the metaverse and NFTs, focusing on guidelines that exist in Japan and key legal aspects under Japanese law regarding the use of the metaverse and NFTs in sports-related businesses.