Legality of Metaverse in India & Way Forward for Web3’s Sustainable Evolution

The metaverse raises critical legal questions around privacy, safety and security which require deliberation.

5 min read
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The invention of the World Wide Web is perceived to be the most significant development in the evolution of the internet. It’s inception marked the initiation of Web 1.0 which majorly entailed a read only version of the web.

Fast forwarding to the early 2000s, the face of the internet changed drastically with the onset of social media and digital assembling of large groups with common interests.

This phase of internet evolution, referred to as web 2.0, is now under another major overhaul with the inception of web 3.0 which consists of the next generation of virtual reality called ‘Metaverse’.

Currently, everything we do on the internet is 2-dimensional, that is, the browse and scroll features.

The logical progression of this is a 3-dimensional, immersive next-generation version of the internet, mostly rendered by Augmented Reality (AR) and Virtual Reality (VR) technology – which is the Metaverse.

Years of innovation have brought the onset of virtual worlds, and as we increasingly shift to online activities including digital gaming leveraged upon cryptocurrencies or non-fungible tokens (NFTs), social networks, and AR applications, we are gradually moving towards this new world.

This makes it important for us to understand its potential, especially, for developing economies like India and also the challenges it entails.

Evolution of Metaverse: India & the World

The vast potential for metaverse has been encouraging companies across the world to invest in it. While the western tech companies are its most vocal proponents, the international discourse on this topic is also being influenced by economic powerhouses like China and South Korea.

With that being said, India also has a key role to play in the evolution of metaverse as is indicated by a range of factors.

India has a thriving culture of entrepreneurship and has risen almost 40 places in the global innovation index in the last seven years. Last year, over 40 Indian startups were valued at over $ 1 billion, second to only US and China.

The growth of digital India is accelerated by India’s large young population which is deeply acquainted with digital interactions and recreations.

The use of digital payments has also been on a rise as evidenced from its 75 percent year-on-year growth between September 2019 and 2021, as per the data released by the Reserve Bank of India.


Furthermore, the consumption of video streaming and gaming platforms has also been on the rise. This growth in gaming has also bolstered the popularity of transmedia experiences as many of these platforms also provide virtual stages for exhibitions, concerts and brand promotions.

These instances of growing popularity of digital technologies coupled with policies for technological innovation can be perceived as the foundational blocks of the metaverse.

Regulatory Challenges

While the technical and policy foundations for the growth of metaverse appears to be present in India, the way to best regulate the technologies underpinning its growth is a major point of deliberation.

The latest Union budget imposes a 30 percent tax on income from virtual digital asset transfers including both cryptocurrencies and NFTs. This move recognises that people see value in NFTs even if it still does not embrace its ownership completely.

Moreover, beyond NFTs, metaverse also raises critical legal questions around privacy, safety and security which require greater deliberation.

Given that the metaverse is essentially an extension of the present day internet and reality, the myriad of online challenges that we currently have such as snooping, data breaches, harassment, and hate speech are likely to be amplified in coming times with increased digitisation and online activities.

As in the case of any other technology, data lies at the centre of the development of the metaverse. The rise in virtual interactions and the unique features of the metaverse means greater sharing of data.

This may lead to a surge in threats of data breaches and concerns around how technology companies collect and process the personal data of people. These concerns are all the more prominent for countries like India that still do not have a dedicated data protection legislation.

In addition to data theft concerns, the increase in virtual interactions and the growth of concepts like digital avatars will make the tracking of cybercriminals and interception of illegal content more pernicious.

The questions of legislations and jurisdictions that will be applicable in this boundless digital world is also a prominent concern requiring consideration by lawmakers.

The protection of intellectual property and ownership is another legal issue that is likely to emerge. If creations are built by Artificial Intelligence, then it is difficult to accord it IPR protection since currently only a work emerging from a human being is considered copyrightable.

Protecting the IPR of content creators will also be a challenge considering the difficulty in tracking copyright infringements in the virtual space.


Towards a More Enabling Digital Future

Despite its immense potential, like any other world, be it real or virtual, metaverse has its own set of challenges. Accordingly, targeted regulation and sustainable policy making is crucial to further its growth while ensuring a safe and secure digital space.

With concerns around metaverse fostering an environment where abuse of data might be more rampant, it is paramount to institutionalise a strong regulatory framework on data protection to put reasonable checks over the technology companies operating in the virtual sphere.

A strong legislation complimented by a robust cyber security regime will also be important for ensuring timely prosecution in matters of data breaches and creating deterrence amongst the cybercriminals.

Technology companies will need to be more responsible and transparent in their data processing and safety practices.

Fostering an informed consent-based model while collecting personal data and abiding by the principles of data minimisation and purpose limitation will be critical to prevent unchecked data processing and collection for commercial gains.

To address the concerns of user safety and keep a check on trolls and proliferators of CSAM and misinformation, uniform enforcement of the community guidelines and Terms of Service of the Platforms is also important.

The platforms must ensure swift and timely user grievance redressal and ensure sustained investment in R&D to explore privacy and security-promoting technologies with the ability to tackle the emerging threats.

The governance mechanisms for the virtual world also need to be supported with scaling and strengthening the efforts to promote digital literacy.

User training and sensitisation on online safety, privacy hygiene, and digital wellbeing is crucial so that people can safely engage in online communities while navigating consciously through harmful behaviours and content.

As the metaverse continues to develop, we are seeing a glimpse of a more digitally advanced borderless world that is full of promise. However, while this new world continues to expand, we have to be aware of the set of challenges it brings with every new development.

To make this new world a safer one, we must take into account how we can address these challenges so we can continue to make strides toward progress.

(Kazim Rizvi is the founder of The Dialogue and Shruti Shreya is a senior research associate. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

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