Balancing Innovation And Regulation: Metaverse Industry Weighs In On Regulatory Proposals
In response to a recent consultation paper issued by the telecom regulator regarding the regulation of the metaverse and emerging technologies, experts and companies within the metaverse ecosystem have expressed reservations about the need for stringent laws. They argue that such regulations could impede innovation in the rapidly expanding metaverse landscape.
The consultation paper, which addresses challenges to data privacy, content moderation, intellectual property rights, digital identity, cybersecurity, taxation, competition, and governance in the context of the metaverse and Web3, has sparked discussions on the appropriate level of regulatory intervention.
Experts suggest that existing regulations, such as the recently passed Digital Personal Data Protection (DPDP) Act, 2023, and the proposed Digital India Bill, already provide safeguards for safety and security in the online world. They caution against introducing new, restrictive laws at this stage, emphasizing the potential stifling effect on innovation.
However, some industry voices propose the consideration of mandatory authorisation of digital identity in Web3. This could involve traceable and verifiable digital identities for purposes like law enforcement, investigation, and financial or e-commerce transactions.
The telecom regulator, while acknowledging the need for a proactive approach to regulate the metaverse, has highlighted concerns about data privacy, content moderation, and the potential misuse of technologies that track real-time emotional states. Experts in the industry endorse the regulator”s emphasis on recommending guidelines and principles for handling real-time emotional data and digital identities in the virtual world.
While expressing support for the regulator”s views on governance issues, industry insiders suggest that TRAI should focus on recommending rather than regulating. They note that data protection falls under the jurisdiction of the data protection board, as per the DPDP law.
In navigating the nascent metaverse sector, legal experts recommend a cautious approach, suggesting a wait-and-watch stance before implementing stringent guidelines. They propose that TRAI can contribute by suggesting policies on issues such as determining consent for using emotional and biometric data and its permissible extent for purposes like ad targeting.
Acknowledging India”s established digital identity through Aadhaar, experts propose a similar Know Your Customer (KYC) structure as a central element of digital identity in the metaverse. Licensing mechanisms could also be explored for moderating content, especially in the gaming industry where considerations for children”s exposure to dark and violent games are crucial.
In addressing the protection of sensitive data, particularly in sectors like healthcare and finance, technological solutions such as selective disclosure and zero-knowledge proofs with verifiable credentials are recommended to empower consumers in the metaverse ecosystem and ensure secure data exchange.
