New Horizon for Financial Law and Policy: Non-Fungible Tokens in the Metaverse

This study examines the functional nature of non-fungible tokens in Web3 space such as the Metaverse, and provides a framework for the financial regulation of NFT transactions. Three aspects are investigated based on practical cases involving existing and proposed laws and regulations: 1) NFTs as a financial asset, 2) institutions providing NFT-related transaction services, and 3) the role technology intersecting with law in this digital space, using Decentralised Autonomous Organisations (DAOs) as an example. The aim is to identify any paradigm shift in the understanding of 1) financial assets in private law, 2) financial services that may be provided in a more decentralised market, and 3) policies and methods of regulatory intervention. The use of DAOs as a regulatory space for NFT transactions in the Metaverse of the future Web3 is explored. The study is relevant to policymakers for understanding their regulatory obligations and also to the stakeholders in the community for finding a common approach to meta-regulation.