Category: Law Tech

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Web 3.0 Tech Law Tech

Pixels to Possibilities: Unravelling India’s Gaming Odyssey

Pixels to Possibilities-gaming

Written by : Ankita Sambyal on Digilah (Tech Thought Leadership

Who isn’t fond of video games? From teens to adults, isn’t it? Some play video games as a source of living or to relieve stress. 

The genesis of video games dates back to their early development when a human being used to interact with a massive video device and an analog remote to give commands to the machine to move a pixelated character. 

The earliest recorded U.S. video game patent dates back to 1948, known as the ‘Cathode-ray tube Amusement Device.’ Some of the earliest video game examples include the Nimrod Computer, a massive machine weighing over a ton, as well as Oxo (1952), Tennis for Two (1958), and Spacewar (1961). 

However, these early video games were not available for public purchase due to their immense size and high costs.

The evolution in video game technology has witnessed the progression from classic games like Mario to multiplayer gaming and now to the concept of metaverse gaming.

 Ralph Baer, the Father of Video Games, played a significant role in advancing the Gaming Industry.

In 1967, he invented the prototype called the ‘T.V. Game Unit #1,’ followed by other inventions like the ‘Brown Box Light Gun’ and the ‘Pump Unit’ in 1967-68. In 1972, Baer introduced the Video Game Console named “Odyssey.” 

The Global gaming industry experienced substantial growth, with a valuation of USD 231.34 billion in 2022 and a projected value of USD 353.35 billion over the next five years. 

The year 2023 shows promising developments, including the introduction of generative AI support that simplifies gaming development and increased investments in the metaverse.

In contrast, the Indian gaming industry was valued at USD 2.8 billion in 2022 and is expected to reach USD 5.0 billion by 2025.

Considering the exponential growth of the gaming industry, it becomes crucial to establish and enforce regulations to protect the interests of players. 

These regulations should focus on promoting fair play, ensuring player safety, safeguarding minors, protecting intellectual property rights, and preserving the confidentiality of data and sensitive personal information of gamers.

 Additionally, such regulations should consider the financial interests of both the gaming industry and the players.

“Most Parliamentarians don’t have a clue as regards the challenges or the opportunities the games industry faces” – David Puttnam

A videogame can be classified on the basis of mode: – 

    1. Online Games

    1. Offline Games. 

Further, Online and Offline Games can further be classified on the basis of interaction: – 

    1. Game of Skill

    1. Game of Chance.

    1. A Mixture of Game of Skill and Chance.

On 6th April 2023, the Ministry of Electronics and Information Technology of India proposed Amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, which gives a comprehensive framework for Online Gaming Ecosystem, however, these amendments still fail to address the vital connotations of the Gaming Industry. 

Although, the endeavour has been made through implementing these Amendments to define and explain the terms like “Online Game” (Sec. 2(qa)), “Online Gaming Intermediary”(Sec. 2(qb)), and “Online Real Money Game” (Sec. 2(qd)), however, the definitions and explanations are not comprehensive enough, and there is still a significant gap in the interpretation of these terminologies to fit in the practicality of today’s gaming that we are witnessing in and around.

In 2020, the Federation of Indian Chambers of Commerce and Industry (FICCI) in partnering with Ernst & Young (EY), released a report stating that USD 817 million has been garnered by the Indian Online Gaming Industry, which involved real-money transactions which depicts that 71% of Indian players are involved with ‘Online Real Money Gaming’. 

Therefore, Regulators need to take a nuanced approach while defining online games and should consider different examples and illustrations to help clarify the distinction between games of skill and games of chance.

    • In situations where monetary transactions are involved in an online game (skill-based or chance-based), it is crucial to adopt a risk-based approach and enforce mandatory KYC verifications for the players utilizing that platform. Additionally, the platform should implement restrictions on financial transactions based on spending limits to ensure responsible and controlled monetary involvement.

    • The legislative amendment should provide clear and detailed explanation of fraudulent activities, that occur in the virtual realm, including services that hijack gaming accounts, theft of virtual identities, fraudulent manipulation of in-game items, cheating and hacking through the use of bots, deceptive game modification, Phony Game Currency Sellers, etc.

    • The legislative amendment should provide detailed and clear distinction of gaming intermediaries and their roles involved in the virtual realm such as online gaming platforms, game developers, publishers, marketplaces etc. along with their roles and responsibilities such as hosting game servers, game distributors, facilitating communication among players, offering customer support etc.

    • The gaming platforms must be legally obligated to provide clear and explicit information on their websites regarding the nature of the game mode in which the player is engaging, distinguishing it is primarily based on skill, chance or a combination of both. By doing so, they will ensure transparency, promote user awareness, and facilitate a fair gameplay environment in compliance with legal requirements.

“The people are pieces of software called avatars. They are the audio-visual bodies that people use to communicate with each other in the metaverse.” – Neal Stephenson

As we have transitioned from traditional gaming to more immersive and interactive experiences facilitated by VR Headsets, we may also witness the emergence of evolved forms of criminal activities in this virtual space. 

Some Countries like Hong Kong are policing the Metaverse to design ‘user safety’ and to educate the public about the potential dangers associated with Web 3.0 and the Metaverse. 

In conclusion, it is imperative for India, which is having a base of 421 million of online gamers and is likely to reach over 442 million by the end of 2023, needs to take a thorough revamp of its gaming regulations to encompass games such as Blockchain-based gaming, Metaverse Gaming. 

By proactively, embracing and regulating these advancements, can help protect consumers, prevent problems of gambling, and ensure a fair and level playing field for all participants that can help India to position itself as a leader in effectively overseeing the Gaming Industry. 

This strategic approach will ensure that India remains competitive and doesn’t lag behind in effectively policing the dynamic and evolving gaming landscape. 

Most asked questions

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Law Tech Web 3.0 Tech

“Law and technology produce, together, a kind of regulation of creativity”

Law and technology produce, together, a kind of regulation of creativity

Lawrence Lessig

Written by : Sophie N. Ngouakang on Digilah (Tech Thought Leadership)

Sophie N. Ngouakang is the managing partner of Tchinsop Law Firm & founder of “Veritas Bitcoin”. My love for innovation has led me to combine interests in technology and law practicing in a tech-related area of law such as Blockchain which to me is very promising than other law specialties. (No offense to my law colleagues with different interests). That is what I decided to do and have been doing for quite some time.   

When it comes to law and technology, one could ask several questions among which – if laws will ultimately have to change to keep up with modern tech or tech will have to adapt to keep in line with the law, considering for instance that many terms and conditions on apps are agreed to by minors?

Minors agreeing to apps is another issue. Parents have an obligation to control what their minor children access. From time-to-time parents have gotten out of financial harm caused by their minor children spending money on apps, but it isn’t always a sure thing. There is a law about collecting information about children under the age of 13, but there isn’t much behind it since the children invariably check the boxes that say their parents have provided permission.

Laws constantly change to keep up with technology. Unfortunately, they often change too slowly. A good example of that would be the failure of the many governments to enact meaningful reforms related to privacy as technology has become more invasive. Habitually, in the law, we adjust the language of things we write or our approaches to conflict resolutions based on changes in technology. 

However, sometimes the law does not address underlying problems and without amendments to existing laws or new laws it is difficult to resolve problems, both criminal, commercial, and civil, within the legal system.

Technology is only as good as the purpose for which we use and not necessarily for which it was intended. It’s essential to state that technology therefore, can’t be considered as a neutral tool since it all depends on how it is used.

Humans abuse tools more often than the intended designer would prefer. Like screwdrivers being used as murder weapons, the technology is not neutral because human operators are not neutral.

The most spoken about technology in recent times seems to be the Blockchain technology.

Blockchain is a decentralized, peer to peer, immutable storage network which is censor free and regulator free because of the absence of one single controlling entity.

Every transaction that is written is voted upon by a majority of nodes and changing something which was written before in the chain is computationally very difficult.   

When blockchain matures to the point of being “the law”, the difference will be that “what happened when” will not take up as large a part of court hearings as today. Also, many disputes will not ever reach court because of more automatic settlements occurring before, as contracts automatically settle when parameters are breached.

You will probably see many systems of law competing for adherents, they will all have to somehow interface with the legacy system until the legacy system either innovates to compete or is abandoned in favor of better regimes.

Criminal, corporate and civil law firms will need to develop an understanding of how cryptocurrencies can be used to facilitate transfers of value worldwide, which will inevitably creep into cases of all kinds as it becomes clear that currencies like bitcoin are here to stay.

As it becomes established case law, there will also be increasing numbers of things where the incorporation of information into a blockchain becomes proof that the information existed or that something happened at that point in time.

Some countries have been much better about dealing with this technology than others as far as amending laws and/or passing new ones are concerned. El Salvador for example being the first country to legalize bitcoin as legal tender. 

I think joining the tech-space with a legal background is always a plus and the inputs one can bring are countless. The first contribution that one can do is for “Smart Contracts”. 

Smart Contracts are executable code that get executed upon the activation of an event in a contract.

I always encourage persons with an interest in law and technology to get an understanding of “Smart contracts” as I see a great demand for people in the near future. We will always rely on human cooperation to uphold the law.

As an illustration, if a person defaulted continuously on his rent payment for 3 months, a smart contract has the power to remotely lock the appartement.

Taking the comparison in the real-world contracts, the Terms & Conditions for a lease agreement would have been drafted by the Attorney of the landlord that exists on paper. In case of default in the payment of rents, although the clause gets invoked, the landlord would still have to serve the tenant a notice to quit, before confiscating the keys to the appartement.

With a “Smart Contract”, it is automated. Indeed, technology and law together produce a kind of creative regulation unprecedented in history, as Lawrence pointed out.

In the end, laws change over time. We see that constantly. For example, we didn’t always have cars. Then we didn’t have cars that went very fast. Now look at all the laws related to building, owning, and operating cars. 

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Law Tech

Law (Taxes and Trade) – The future is tech and trust

Written by Parul Vivek on Digilah (Tech Thought Leadership)

The cross-border trade and tax landscape globally has been undergoing exponential changes. With dynamic geopolitical situation, ever evolving regulations and introduction of new compliance requirements, increasing levels of enforcement is needed to achieve the multiple objectives of legitimate revenue collection, ease of doing business, trade facilitation, while ensuring hassle-free compliances. And technology is playing an enabling role to move from a more control-based tax and trade regime to a trust-based future.

Stewart Brand [i]once said – “Once a new technology rolls over you, if you’re not part of the steamroller, you are part of the road”. Hence, government authorities are proactively embracing advanced analytical technologies such as big data, data analytics, artificial intelligence, and machine learning as they see clear benefits with regard to increased transparency, risk management, fraud detection, trade facilitation, mutual co-operation and greater compliance. These trends are expected to increase as countries around the world continue to implement the Organization for Economic Co-operation and Development (OECD)’s Action Plan on Base Erosion and Profit Shifting (BEPS) [ii]and its requirements for more transparency in corporate tax reporting. Further, there is an increased collaboration between various multilateral agencies/ governments across the globe in exchanging of information via IT equipped databases, automated tools, etc.

In India, the technology led regulatory reforms have played a positive role in the field of both direct and indirect taxes, including customs, as well as policy making. Implementation of the landmark Goods and Service Tax (GST) in 2017 is one of the biggest examples of such reform. The direct tax arena has also seen an early adoption of technology. Additionally, introduction of faceless assessments of import and export entries under customs, integration of courier and cargo systems under one national customs portal ICEGATE[iii] and may other such initiatives in the pipeline clearly demonstrate government’s efforts and push towards digitization.

Even post the roll-out of GST, several forward-looking measures such as e-returns, e-registrations, e-way bills, e-invoicing, and QR codes, have been implemented by the government, which mark important milestones in India’s digitalization journey. As an outcome, India has witnessed an all-time high GST revenue collection from October 2020 onwards. In the recently released collection figures, the Finance Ministry revealed that the provisional net indirect tax collections [iv]for financial year FY2020–21 recorded a growth of 12.3%; 108.2% of revised estimates of indirect taxes for FY2020–21 has been achieved. This is a big win and testimony to the fact on how embracing technical tools can help achieve more legal compliance and revenue targets.

Another notable tech-based initiative by India Finance Ministry as part of its strategic commitment to improve global trade has been the conducting of national Time Release Study (TRS) [v]started in Aug 2019 and institutionalized on an annual basis.  It helps to diagnose existing and potential bottlenecks which act as barriers to the free flow of trade and take remedial actions for reducing the cargo release time at various Indian ports (sea ports, air cargo completes, inland container depots, etc.).

There is no doubt that technology and law have a complicated interrelationship. As a matter of fact, advancement in technology is almost always expected to outpace law making as seen recently with introduction of crypto currencies, electric vehicles, digital payment platforms, social media platforms, wherein the regulators worldwide are still struggling to define legal boundaries. But on the other hand, technology is helping in better implementation of law by giving more feedback to legislature. In addition, technology is redefining the legal field. Online research databases have replaced law books, digital contracts have replaced physical copies, and numerous other advancements are helping to simplify complex legal world. New technologies hold significant potential to support policymakers in law making, legal analysis and enforcement.  As Andy Grove [vi]once said “Technology will always win. You can delay technology by legal interference, but technology will flow around legal barriers”.

And as government authorities embrace digitalization, it’s never been more important for individuals and companies to understand every detail of their online stories, both personal and professional (including those on Instagram too) 😊.

[i] Stewart Brand is an American writer, best known as editor of the Whole Earth Catalog.

[ii] Base erosion and profit shifting (BEPS) refers to tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying taxes

[iii] Indian Customs EDI Gateway

[iv] Source: Published by Ministry of Finance April 2021

[v] The TRS is an internationally recognized tool advocated by World Customs Organization (WCO) to measure the efficiency and effectiveness of international trade flows. Read the latest at https://www.cbic.gov.in/resources/htdocs-cbec/implmntin-trade-facilitation/national-time-release-study-2022.pdf

[vi] Andrew Stephen Grove was a Hungarian-American businessman, engineer, and CEO of Intel Corporation.

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Law Tech

Law and Technology: A symbiotic relationship

Written by Purushottam Anand on Digilah (Tech Thought Leadership)

Law is a tool of ‘social engineering’ which may be used to create, modify or mould social norms. Even the other way round is true as the society also induces introduction, amendment and repeal of laws to reflect the present state of the society. Technology in different forms has always been a part of our society and share a similar symbiotic relationship with Law. Sometimes Law requires innovation and change in the technology, while on other occasions, technology forces changes in law to appropriately regulate interaction of the society with a particular technology. It will be useful to consider one example from each of these categories to appreciate this symbiotic relationship between Law and Technology.

Illustration 1- Card Tokenization

RBI has introduced card tokenization which prohibits merchants from storing customer card details on their servers and mandates the adoption of card-on-file (CoF) tokenization as an alternative to card storage. Enforcing adoption of this new technology will safeguard customers from the security vulnerability of their card details getting stored and misused by the merchants. This will help the customer be safer while online shopping as the actual card details will not be shared with the merchant, instead, a token that is unique to each card, device and token requestor, would be used to verify the credentials. RBI’s push towards technology for implementation of regulations is a big step for a digital, advanced India. 

Illustration 2- Regulation of Cryptocurrencies

Technology advancements, if not backed by the law, remain dubious and reflect uncertainty amongst the masses. Blockchain technology has already revolutionized many sectors of our economy including finance, banking and logistics and supply-chain and has huge potential to change the way value is presently created and transferred through the Internet. Cryptocurrencies, which are based on Blockchain technology, have exponentially grown in popularity and adoption. Though cryptocurrencies are issued by decentralized communities and do not have backing from any government, common people, corporations and even the Governments of few countries seem convinced about the potential of this new technology. El Salvador has in fact declared Bitcoin, the first cryptocurrency, to be the legal tender in the country.   

Increasing adoption of this technology by society has forced Governments across the globe to come up with regulations around cryptocurrencies. Most of the countries in the world have either passed regulations or are at some stage of formulating regulations around cryptocurrencies. 

Thus, Law and Technology regularly interact, complement, and influence the progress and development of each-other in a symbiotic manner.

We, at Crypto Legal, assist Blockchain and Cryptocurrency related projects in navigating through the uncertain and complex regulatory regime. Though there is no specific legislation regulating cryptocurrencies in India; however, a cryptocurrency project needs to ensure compliance with all other laws and regulations which may relate to corporate law, banking and payment laws, tax laws and other laws which may apply to the business model of the project. For instance, we assisted a metaverse gaming company is structuring its gaming token and preparing agreement for sale of tokens ensuring that the project complies with applicable laws and at the same time offers incentives to the players in form of tokens.

The symbiotic relationship between law and technology mandates that regulatory regime for any emerging technology like cryptocurrency must evolve gradually through an iterative process between the regulators and the society/community.