Regulating the Metaverse Economy: How to Prevent Money Laundering and the Financing of Terrorism by Annelieke Mooij

Chapter 1 
Governing the Meta-World Finances 
Imagine that you live in London and are a fan of musicals. You have grown 
particularly fond of the musical Hamilton. As a special rendition the musical plays 
in New York with your favorite star singing the lead. It provides a great way for you 
to see the musical and catch up with your old classmate who moved to New York. 
Unfortunately, you live in Europe and you cannot find the time to travel to New York 
and back. Your option is to buy a ticket to a live screening and have a video call with 
your friend afterwards. Most people will agree that this is not a real alternative to 
seeing the musical in real life. Whilst streaming is less expensive and will save you 
the trouble of travelling, it does not offer the same experience. The videocall with 
your friend will provide you with some interaction but not on the same level as 
sitting next to each other at the theatre. In comes the Metaverse to provide you the 
immersive 3D alternative. Instead of sitting at home or in your local cinema 
watching the live screen in 2D, the Metaverse will allow you to buy a ticket to a 
virtual seat in the theatre. Your friend is sitting on the virtual seat next to you, so you 
both chat before the curtain call. In the break you both have a drink from your own 
kitchen but with the experience of being in the café of the theatre. 
The development of technology is ever-continuing. The world between online 
and offline is getting blurred. The Metaverse will bring many new experiences and 
increase the accessibility to these experiences. All that is needed to access the 
Metaverse is a device with internet access. The immersive 3D experience can be 
created using cardboard vr-glasses which are sold for around €15,-. In case of real 
deprivation, these glasses can even be fabricated at home from an old cardboard box. 
The possibilities of the Metaverse are endless but the Metaverse itself brings many 
regulatory challenges. The Metaverse can be accessed from anywhere on the planet 
which makes it difficult to determine which country or region has jurisdiction. The 
problem of jurisdiction is made even more difficult because the Metaverse is “[...]an 
open source decentralized, interoperable platform for programmable digital asset

 and digital identities built on Substrate.” In non-coding language, this means that it 
is free and open for everyone to use. Virtual realities can be connected to the 
Metaverse by anyone anywhere. The code of the Metaverse is like a building 
platform upon which many different worlds can be built by anyone who knows 
how to build blocks. These worlds form a network of virtual environments.
 The environments can be created and hosted by different providers and they can 
then be accessed at any point by anyone. It can use the real world as a template for 
the shared virtual reality which can be used to facilitate daily interactions. The 
Metaverse gained fame on the 28th of October 2021 when Meta, the parent of 
Facebook, announced their intentions for the Metaverse. Meta intends to create meta 
home and meta workplace. The aim is to provide the general public with virtual 
reality settings designed to replace face-to-face interaction. One of the potential 
aims of this environment is to facilitate a virtual office space whereby day-to-day 
office interactions will take place through virtual reality. With this potential comes a 
new form of virtual existence. Whilst most previous virtual realities have been 
created to provide an alternative world, the Metaverse would provide a virtual 
real-life existence. The virtual experience could cheaply facilitate a feel of real-life 
luxury. The hype is therefore likely to stay. 
The new form of virtual existence would open up a wide array of possibilities. 
One can tag into the virtual office and conduct 3D business meetings. An interna-
tional meeting could take place within a single virtual location. Metaverse distin-
guishes itself from other meeting platforms by combining a wide array of services 
such as communication, payment and smart contract building. The Metaverse 
furthermore will be provided in 3D. Due to its open source, anyone can build a 
reality and connect it to the Metaverse, therefore allowing a network of providers to 
be attached. The Metaverse will allow its users to walk through a high-end retail 
street, take a walk through a rainforest and close by watching a 3D football match all 
from their own living room. Though the Metaverse will open up new possibilities 
vis-à-vis the use of the internet, it also raises a series of legal questions. 
These legal questions include private law matters such as the applicable law and 
jurisdiction over virtual contracts. Criminal law questions such as what constitutes a 
virtual crime. But perhaps most importantly what authority can regulate the internet? 
Governments aim to promote public values within their society. Whilst promoting 
these values they are limited to their own borders and jurisdictions. The jurisdictions 
are defined by physical space. Some of this space is easy to grasp such as land and 
some of it is a little less tangible such as water and aerial territory. Nevertheless, even 
the sky can be identified as what does and does not fall within a government’s 
jurisdiction. Some of the challenges related to water and sky, such as climate change, 
require an international approach. Governments therefore participate in

Regulating the Metaverse Economy: How to Prevent Money Laundering and the Financing of Terrorism by Annelieke Mooij