NFT lawyer explains why crypto is not compatible with gambling
Cryptocurrency and NFTs are a new market breaking into the mainstream. Held on a decentralized blockchain, the coins or items are meant to offer a sense of security away from the unstable nature of centralized banks.
What we have seen, however, is instability everywhere. FTX, the second largest crypto exchange, recently crashed, wiping $30 billion with it. Big-name developers like Square Enix and Ubisoft seem intent on incorporating NFTs into games, but have seen little success.
To find out the issues of incorporating the two different technologies, we sat down with Will Charlesworth, Deputy Head of Commercial Litigation and Dispute Resolution at London law firm Saunders Law, to talk about the challenges.
Will Charlesworth is Deputy Head of Commercial Litigation and Dispute Resolution at UK law firm Saunders Law.
His title may be long, but what it basically boils down to is that Charlesworth is a lawyer who does NFT cases. Giving us an overview of the basics, he said: “NFTs can offer significant benefits for brands, to establish a commercial presence. It’s a way to generate revenue streams and build a community. And it’s potentially a challenging legal landscape , as it is constantly changing.”
Charlesworth moved to NFT-related law in 2017, which is recent for most types of law, but ancient when it comes to cryptocurrency.
People still win and lose huge amounts of money in the crypto market, and protections must be put in place to prevent disruptions.
Speaking about companies like Ubisoft, which recently attempted to add NFTs to Ghost Recon before shutting down the project and the game, Charlesworth shared his concerns.
He explained: “There are definitely challenges to overcome and it has to be more than NFTs for NFT’s sake. It has to be something that adds real value, and compliments and adds value to the gaming space. They have to move away from being hype -investment and a passing fad.”
Players see this trend as just that. When someone can create value with their FIFA Ultimate Team cards, or Sims furniture, why would they move to the blockchain.
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He continues: “It’s a challenging sell to push NFTs at the moment. The example of Ghost Recon in particular shows that players are smart about this, and I don’t think the hype around NFTs necessarily translates into the gaming world.”
Ubisoft experimented with playable NFTs in Ghost Recon Breakpoint, before ending NFT support for the game.
Not only do companies have to convince players that their crypto assets are worthwhile, but there are technological hurdles to overcome.
As for the foundation of the technology, Charlesworth explains: “Trying to get NFTs and technology that works outside of a gaming environment, that’s really decentralized, to be able to work on different platforms at the same time is really a unicorn. It’s just incredibly difficult. I can also see a cross-platform licensing headache.”
However, there are advantages. Although Stadia was not a crypto asset, faith in the company was restored when Google refunded all its users. People no longer feel like they’re taking a risk with a Google gaming product, and while Charlesworth admits “that could be a selling point for the company,” he doesn’t see many companies following suit.
When Google canceled its Stadia gaming service, it refunded all users, setting an example that companies operating NFTs should follow to restore user trust.
For him, crypto and games are at a crossroads until one thing gives. He claims: “Unless players are willing to accept [that their NFT dies with the game], then I think it’s always going to be a problem. But if they accept it, there is no advantage over having an NFT [rather than an in-game item] in that room. I think we’re a little bit away from figuring out how that might actually work.”
However, there is light at the end of the tunnel for those who have invested in cryptocurrency or NFT. In the UK, courts have ruled that crypto-assets are a form of property and therefore protected under consumer rights. This does not mean you are protected. As Charlesworth explains: “It always comes down to the terms and conditions of whether you want to be compensated.”
However, the consumer rights issue poses a significant problem when it comes to selling NFTs on a global scale. As we’ve seen with loot boxes being restricted in some countries, companies have to change their games to comply with local regulations.
He said: “When a UK consumer acquires an NFT in a game, they get consumer rights, and those rights apply whether the seller is a UK resident or not. You need to be fully informed about exactly where you’re directing your sales. And they can’t rely on obscure terms and conditions to protect themselves.”
Whether NFTs in games will become the norm despite pushback, just as microtransactions did in the past, Charlesworth is unsure. He explains: “I don’t want to be quoted as saying ‘no’ because at some point in the future something might happen. The problems that need to be overcome with NFTs and games are the cultural side, where people don’t want to add another layer of microtransactions to games, and that the blockchain is not fully compatible with games. Blockchains are decentralized, games are centralized.”
