Asset Ownership and Protection Peculiarities in the Metaverse
Like any new innovative technology that promises impressive human experiences and investment opportunities, delving into the metaverse does not have unique investment issues. According to Janine Yorio, CEO of Republic Realm, a metaverse real estate investment and consultancy organization, “There are significant risks, but possibly big returns” in investment in the metaverse.
A transaction in the metaverse takes place on blockchain platforms primarily via crypto tokens, increasing susceptibility to threats (attempts to steal secret phrases or engage in other scams such as creating fake metaverse platforms). There is also the volatility of property prices as they depend solely on the cryptocurrency price in which they are transacted. It is most reasonable for anyone willing to invest or get a property on any metaverse platform to do proper research and background checks to avoid loss.
Another significant risk in investing in the metaverse is how difficult it is to track the assets of any deceased on the metaverse. The key to transferring any digital item lies in its owner’s wallet, guided by a list of secret phrases privy exclusively, as advised, to the owner. Also, the record of transactions, asset buys, and investments in the metaverse world are held on blockchain platforms with mostly NFTs as evidence of possession. According to David Kemmerer (a crypto tax expert), a lost wallet address remains the most common form of cryptocurrency loss. Death is an inevitable cause and it is unwise to disclose such information to anyone.
If an investor in the metaverse dies, it is difficult for relatives and loved ones of the decedent to identify the total value of the assets owned. It is even more challenging to process asset transfers. Aside from the fact that relatives are unlikely to be privy to secret phrases, each metaverse platform has unique terms and conditions that would prove a severe deterrent to the possible recovery of assets.
Digital Asset Protection Practice
Since digital assets have seen a sudden rise in value, they could be an excellent investment that can turn you into a millionaire overnight. However, the issue is that they are a lot easier to lose than physical assets. Since a client’s property is registered with the government, it is a straightforward process for the heirs to claim it at the time of their death. This is not the case with virtual assets (at least not for now).
These platforms offer investors and collectors a marketplace to buy and store digital assets, and they are the playground for digital asset ownership. As a professional advisor, you must be familiar with these platforms’ unique regulations and terms of services to ensure you are best positioned to protect your clients’ digital assets. But with the volume of content providers, ever-changing policies, and lack of standardized account holder death protocols, is that even possible?
Legal Protection of Digital Assets on the Metaverse
A few things need to be kept in mind when working with active metaverse clients. Since the client has no proof other than a transaction history saved on their account, contacting the relevant platform may be nearly impossible for the asset transfer request. Even if you succeed in a long shot, knowing the value and volume of the assets may be unattainable. (since there is no record of it anywhere other than the client’s different accounts).
According to many platforms, asking your client to share their password or recovery phrases with you will significantly violate policies and privacy laws. Your client would also risk losing all their assets in a single hack on your system.
Content providers/custodians of the digital assets will simply dump all the deceased person’s data and can’t be forced by the government to transfer the ownership since laws for physical assets don’t apply to virtual assets, as explained earlier.
These unique problems call for a solid plan to help you avoid such issues. Directive Communication Systems has a way to make everything easier for financial advisers and lawyers etc. They allow you and your clients to build a portfolio of digital assets through their system.
This way, the client’s lawyer, wealth manager, and family can track the digital assets he owns. Directive Communication Systems (DCS) also help their clients obtain the disclosure and distribution of online accounts, apps, and device content to quickly pass on clients’ digital assets to designated persons.
It is important to discuss everything with your client and help them prepare for all eventualities. If they own any kinds of digital assets, it is your responsibility to know about them in detail so you can guide your client and help them devise succession plans. Directive Communication Systems are the game-changing way to do this.