As we touched on in our prior posts,  NFTs and Their Role in the Metaverse and  Lions, Tigers, and Meta-Wolves: Oh My! Non-Fungible Tokens (NFTs) have arrived and are now inextricably linked to the Metaverse, the concept of interconnected virtual worlds in which businesses have been heavily investing.1 Mark Zuckerberg hopes for billions of users to join his version by the end of the decade.2 Platforms such as Axie Infinity imagine a "future where work and play become one."3 Businesses betting on the concept aim to incorporate everyday life into the Metaverse, a world encompassing virtual reality hubs, where users utilize smartphones and visors as a means to interact with virtual environments. 4 The term Metaverse has received considerable traction online in the wake of Facebook's rebrand to "Meta" in October.5 As more money continues to pour in, the chances of the metaverse becoming an even more influential platform only continue to rise.

Questions remain as to what the financial impacts of the Metaverse will be, and what will drive the potential trillion-dollar online economy.6 The answer can be found in blockchain technology, with cryptocurrencies like Bitcoin and Ethereum acting as the money used to purchase the stuff that makes up the Metaverse-digital assets in the form of NFTs.

Virtual Economy

Using NFTs, people can-and are-purchasing virtual analogs to nearly anything that can be purchased in the physical world, from a designer handbag for an avatar to a plot of virtual real estate.7 The Australian Open is selling "Art Ball" NFTs-digital collectibles designed by artists and linked to winning shots in the tournament-during this year's tournament8 and Dolce & Gabbana sold a collection of virtual-only designs mixed with real-world pieces as NFTs in September.9 While cryptocurrencies are fungible-meaning any two tokens are mutually interchangeable-NFTs are non-fungible and thus allow any item created, bought, or sold online to exist as a unique entry on the blockchain where ownership is verified. These NFTs can be traded on online exchanges such as OpenSea, which topped $5 billion in total sales in the month of January alone.10

Virtual world Second Life offers a glimpse into just how large a virtual world economy could be with widespread adoption.11 The platform, founded in 2003, has 200,000 daily users and boasts an annual GDP of $600 million from 345 million annual transactions.12 If Zuckerberg realizes his goal of one billion users on Meta by the end of the decade, the total impact on the economy could be enormous, potentially reaching trillions of dollars annually. For an economy in the Metaverse to reach its full potential, users must be able to convert their assets online back to fiat currency, such as the U.S. dollar. Second Life users can convert virtual currency to U.S. Dollars on Tilia Pay, which acts as a combination of PayPal and Coinbase.13


In recent years, videogame developers such as Epic have offered collectibles within games, such as outfits and accessories, which users can purchase for their characters.14 Gamers have been spending significant amounts of money online to stand out amongst their peers.15 Ubisoft has incorporated NFTs as a form of currency within their games.16 In its newest release, Ghost Recon Breakpoint, Ubisoft offers 'Digit' NFTs-collectibles to be used by a user's character in-game-to its users. Digits are either given to players randomly in free "drops" or earned in a play-to-earn format.17

One such Digit, the-Wolf Enhanced Helmet A-requires 600 hours of gameplay to redeem and will likely fetch quite the price on the resale market.18 This play-to-earn format may be where many games are headed, as it incentivizes players to either invest extensive time playing to earn the rewards they desire or spend money in the virtual economy to obtain them.

Secondary sales of NFTs found in blockchain games accounted for 20% of total NFT sales last year.19 Axie Infinity is currently the most prominent play-to-earn game, with over $3.6 billion in NFT sales.20 Many players in the Philippines play it professionally, finding it more lucrative than local employment.21 The game's F.A.Q. even states "We believe in a future where work and play become one. We believe in empowering our players and giving them economic opportunities."22


A new economy based on cryptocurrencies and NFTs will be born as currency continues to flow into and out of the Metaverse. Given the potential size and scope of a Metaverse economy with mass adoption, one can understand Zuckerberg's decision to rebrand Facebook as Meta. Similarly, it is not surprising to see more and more companies continue to invest in the Metaverse-the sky is truly the limit for this new virtual world. Businesses looking to grow may want to enter the Metaverse to stay ahead of the curve. Early adopters can reach a new crop of virtual consumers before the competition, building a foothold in the virtual economy. With less overhead for a virtual storefront and low production costs for virtual goods, businesses may be able to improve their margins while expanding their customer base by establishing a virtual presence.

Business & Legal Risks

The pace of adoption is breathtaking and has far outpaced the ability of traditional legal approaches to keep up. The risks are significant. As we wrote,  business risks include disaffected customers. The legal risks are significant as well. Because NFTs are classified as property instead of securities, wash trading is rampant in many NFT markets.23 NFTs and tokens present other legal risks, too, ranging from securities to copyright. Traditional real estate is governed by established state, local and national laws. There is no similar framework for real estate transactions in the metaverse.

For further information or questions about navigating the legal considerations of the Metaverse, contact Mike Tomasulo (Co-Leader, Videogame, Gaming & Esports Group) or your Winston contact. Our attorneys proactively follow and advise on trends in this quickly evolving space. We invite all those interested in recent developments to sign up to receive emails with links to new posts by clicking  here.

About Winston's Videogame, Gaming & Esports Group

Recognizing that emerging industries require bespoke lawyering, Mike Tomasulo and David Enzminger formed and lead Winston's Videogame, Gaming & Esports Group to provide comprehensive legal solutions to companies in these industries. This multidisciplinary group includes more than 60 lawyers across 10 practices working seamlessly to assist companies in these industries in all areas, including managing IP portfolios, assisting esports companies to establish global sports leagues, selling franchises, and developing proactive legal solutions for issues that arise from league operations. We represent videogame publishers in antitrust matters and represent both rights owners and gaming companies in licensing issues for game content. In addition, our team helps electronic game clients prepare for all types of regulatory and public scrutiny issues, such as corporate governance, data privacy, and harassment/discrimination claims that are sure to come as the industry continues to grow in both size and influence. Our offices in New York, Silicon Valley, Los Angeles, Shanghai, and Hong Kong provide gaming clients with a global platform for their complex and evolving legal needs.


See  Frank Holmes, The Metaverse Is A $1 Trillion Revenue Opportunity. Here's How To Invest . . ., Forbes, Dec. 20, 2021,

2 Anna Wiener, Money in the Metaverse, The New Yorker Jan. 4, 2022,


4 Musadiq Bidar & Dan Patterson, Facebook bets big on the Metaverse. What is it?, CBS News Nov. 1, 2021,

See  Mike Isaac, Facebook Renames Itself Meta, N.Y. Times, Oct. 28, 2021,

6 Holmes, supra  note 1


8 Sebastian Sinclair, Australian Open Metaverse, 'Art Ball' NFTs Ace First Week as Tournament Rolls On, Blockworks, Jan. 24, 2022,

9 Alex Kessler, Dolce & Gabbana's NFT Experiment is A Million-Dollar Success Story, Vogue, Sept. 30, 2021,

10 Andrew Hayward, OpenSea Hits Record $5B in Monthly Sales as Ethereum NFT Market Swells, Decrypt, Feb. 1, 2022,

11 Dean Takahashi, Will the metaverse bring the second coming of Second Life?, VentureBeat, Sep. 3, 2021,

12 Id.

13 Tilia, (last accessed Jan. 12, 2022).

14 Paul Tassi, Epic Reveals It Made $50 Million From One Set of 'Fortnite' Skins, Forbes, May 11, 2021,

15 Id.

16 Patrick Klepek, We Tracked Down the People Who Are Actually Buying Ubisoft's NFTs, Vice, Jan. 13, 2022,

17 Jay Peters, Ubisoft is bringing NFT gear to Ghost Recon, The Verge, Dec. 7, 2021,

18 Jon Yelenic, Ghost Recon Breakpoint NFT requires you to have played the game for over 600 hours, Gamepur, Dec. 13, 2021,

19 Mason Nystrom & Jerry Sun, Blockchains: Changing the Game, Forte, Feb. 16, 2022,

20 Id.

21 Wiener, supra note 2.

22 Axie Infinity FAQ, (last visited Jan. 11, 2022).

23 See Lachlan Keller, Wash trading in NFT marketplace LooksRare can inflate prices: analysts,  Forkast, Fed. 4, 2022,,remains%20unregulated%20in%20NFT%20markets.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.